rowan university

ROWAN UNIVERSITY (A Component Unit of the State of New Jersey)

Basic Financial Statements, Management’s Discussion and Analysis, Required Supplementary Information and Schedules of Expenditures

of Federal and State of New Jersey Awards

June 30, 2018

(With Independent Auditors’ Reports Thereon)

ROWAN UNIVERSITY

(A Component Unit of the State of New Jersey)

Table of Contents

Page

Independent Auditors’ Report on Basic Financial Statements 1

Management’s Discussion and Analysis (Unaudited) 3

Basic Financial Statements:

Statement of Net Position as of June 30, 2018 13

Statement of Revenues, Expenses, and Changes in Net Position for the year ended

June 30, 2018 14

Statement of Cash Flows for the year ended June 30, 2018 15

Notes to Basic Financial Statements 16

Required Supplementary Information (Unaudited):

Schedules of Employer Contributions 61

Schedules of Proportionate Share of Net Pension Liability 62

Schedule of Proportionate Share of the Total OPEB Liability 63

Schedule of Expenditures of Federal Awards 64

Schedule of Expenditures of State of New Jersey Awards 67

Notes to Schedules of Expenditures of Federal and State of New Jersey Awards 69

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance

and Other Matters Based on an Audit of Financial Statements Performed in Accordance

with Government Auditing Standards 70

Independent Auditors’ Report on Compliance for Each Major Federal and State of New Jersey

Program; Report on Internal Control Over Compliance; and Report on Schedule of

Expenditures of Federal Awards Required by the Uniform Guidance and Schedule of

Expenditures of State of New Jersey Awards Required New Jersey OMB Circular 15-08 72

Schedule of Findings and Questioned Costs for the year ended June 30, 2018 75

Independent Auditors’ Report on Basic Financial Statements

The Board of Trustees

Rowan University:

Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities and the aggregate

discretely presented component units of Rowan University (the University), a component unit of the State of

New Jersey, as of and for the year ended June 30, 2018, and the related notes to the financial statements,

which collectively comprise the University’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and

maintenance of internal control relevant to the preparation and fair presentation of financial statements that are

free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our

audit in accordance with auditing standards generally accepted in the United States of America and the

standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller

General of the United States. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free from material misstatement. The financial

statements of Rowan University Foundation and South Jersey Technology Park at Rowan University, Inc., were

not audited in accordance with Government Auditing Standards.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of

the risks of material misstatement of the financial statements, whether due to fraud or error. In making those

risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation

of the financial statements in order to design audit procedures that are appropriate in the circumstances, but

not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we

express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and

the reasonableness of significant accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective

financial position of the business-type activities and the aggregate discretely presented component units of

Rowan University as of June 30, 2018, and the respective changes in financial position and, where applicable,

cash flows thereof for the year then ended in accordance with U.S. generally accepted accounting principles.

KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

KPMG LLPNew Jersey Headquarters51 John F. Kennedy ParkwayShort Hills, NJ 07078-2702

2

Emphasis of Matter

Adoption of New Accounting Pronouncements

As discussed in note 1(b)(xiii) to the financial statements, as of July 1, 2017, the University adopted

Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for

Postemployment Benefits Other Than Pensions. Our opinions are not modified with respect to this matter.

As discussed in note 12 to the financial statements, as of July 1, 2017, the Rowan University Foundation

adopted the provisions of GASB Statement No. 81, Irrevocable Split-Interest Agreements. Our opinions are not

modified with respect to this matter.

Other Matters

Required Supplementary Information

U.S. generally accepted accounting principles require that the management’s discussion and analysis on

pages 3 through 12 and the schedules of employer contributions and schedules of proportionate share of net

pension liability on pages 61 and 62, respectively, and the schedule of proportionate share of the total OPEB

liability on page 63 be presented to supplement the basic financial statements. Such information, although not a

part of the basic financial statements, is required by the Governmental Accounting Standards Board who

considers it to be an essential part of financial reporting for placing the basic financial statements in an

appropriate operational, economic, or historical context. We have applied certain limited procedures to the

required supplementary information in accordance with auditing standards generally accepted in the United

States of America, which consisted of inquiries of management about the methods of preparing the information

and comparing the information for consistency with management’s responses to our inquiries, the basic

financial statements, and other knowledge we obtained during our audit of the basic financial statements. We

do not express an opinion or provide any assurance on the information because the limited procedures do not

provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2019 on

our consideration of the University’s internal control over financial reporting and on our tests of its compliance

with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of

that report is solely to describe the scope of our testing of internal control over financial reporting and

compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University’s

internal control over financial reporting or on compliance. That report is an integral part of an audit performed in

accordance with Government Auditing Standards in considering the University’s internal control over financial

reporting and compliance.

Short Hills, New Jersey

March 29, 2019

ROWAN UNIVERSITY


Management’s Discussion and Analysis (Unaudited)

June 30, 2018

3 (Continued)

Introduction

This section of Rowan University’s (the University) financial statements presents our discussion and analysis of

the University’s financial performance for the fiscal year ended June 30, 2018 and 2017. Since this discussion

and analysis is designed to focus on current activities, it should be read in conjunction with the University’s

basic financial statements, which follows this section. Management has prepared the financial statements and

the related note disclosures, along with the discussion and analysis.

University Overview

Rowan University is a selective, public national research university located in Glassboro, Camden and

Stratford, New Jersey. It is recognized for its nationally ranked academic and athletic programs, talented

professors and high-tech facilities. Rowan prides itself on being able to provide its approximately 19,500

students an outstanding education at an exceptional value.

The University is comprised of seven academic colleges and five schools, including the William G. Rohrer

College of Business; the Henry M. Rowan College of Engineering; the Colleges of Communication and Creative

Arts, Education, Humanities and Social Sciences, Performing Arts, and Science and Mathematics; the Cooper

Medical School of Rowan University; the Rowan University School of Osteopathic Medicine; the Graduate

School of Biomedical Sciences; the School of Health Professions; and the School of Earth and Environment,

along with an Honors College. Rowan’s Division of Global Learning and Partnerships offers flexible

undergraduate and graduate programs on campus and off site – including at two area community colleges –

and online. Within these colleges and schools the University offers 75 bachelor’s degrees, 41 master’s

degrees, five doctoral degrees (Ed.D. and Ph.D.) and two professional degrees.

Rowan is one of two public universities in the country to offer M.D. and D.O. medical degree programs. The

institution is also home to the South Jersey Technology Park, which fosters the translation of applied research

into commercial products and processes. Rowan has been recognized by the U.S. News and World Report as

one of the top 100 public universities in the nation and its engineering school is ranked 23rd for undergraduate

education nationwide.

The State of New Jersey (the State) recognizes the University as a comprehensive research university and as

a public institution of higher education. The New Jersey Legislature appropriates funds annually to support the

University. However, the University operates autonomously from the State.

Financial Statements

The University’s basic financial statements include three financial statements: Statement of Net Position;

Statement of Revenues, Expenses and Changes in Net Position; and Statement of Cash Flows, which have

been prepared in accordance with accounting principles generally accepted in the United States of America as

promulgated by the Governmental Accounting Standards Board (GASB). These statements focus on its assets,

liabilities, deferred outflows and deferred inflows of resources, revenues, expenses, and cash flows on an

entity-wide basis.

ROWAN UNIVERSITY



June 30, 2018

4 (Continued)

Statement of Net Position

The Statement of Net Position presents the assets, deferred outflows of resources, liabilities, deferred inflows

of resources, and net position of the University as of the end of the fiscal year. The Statement of Net Position is

a point of time financial statement. The purpose of the Statement of Net Position is to present to the readers of

the financial statements a fiscal snapshot of Rowan University. The Statement of Net Position presents

end-of-the-year data concerning assets (current and noncurrent), deferred outflows of resources, liabilities

(current and noncurrent), deferred inflows of resources, and net position.

Net position is one indicator of the current financial condition of the University while the change in net position

is an indicator of whether the overall financial condition has improved or worsened during the year.

From the data presented, readers of the Statement of Net Position are able to determine the assets available to

continue the operations of the University. They are also able to determine how much the University owes

vendors, investors, and lending institutions. Finally, the Statement of Net Position provides a picture of the net

position (assets plus deferred outflows of resources minus liabilities minus deferred inflows of resources) and

their availability for expenditure by the University.

Net position is divided into three major categories. The first category, net investment in capital assets, provides

the institution’s equity in property, plant, and equipment owned by the institution. The next category is restricted

net position, expendable. Restricted net position, expendable is available for expenditure by the institution but

must be spent for purposes as determined by donors and/or external entities that have placed time or purpose

restrictions on the use of the assets. The final category is unrestricted net position. Unrestricted net position is

available to the University for any lawful purpose of the University.

A summary of the University’s assets, deferred outflows of resources, liabilities, deferred inflows of resources

and net position as of June 30, 2018 and 2017 as follows:

2018 2017

(In thousands)

Current assets $ 207,069 213,536

Capital assets 930,463 935,876

Other noncurrent assets 92,228 83,693

Total assets 1,229,760 1,233,105

Deferred outflows of resources 93,072 108,857

Total assets and deferred outflows of resources 1,322,832 1,341,962

Current liabilities 95,970 90,244

Noncurrent liabilities 947,915 1,012,297

Total liabilities 1,043,885 1,102,541

ROWAN UNIVERSITY



June 30, 2018

5 (Continued)

2018 2017

(In thousands)

Deferred inflows of resources $ 181,165 146,617

Total liabilities and deferred inflows of resources 1,225,050 1,249,158

Net position:

Net investment in capital assets 218,156 217,306

Restricted expendable 22,223 21,109

Unrestricted (142,596) (145,611)

Total net position (deficit) $ 97,783 92,804

Current assets consist of cash and cash equivalents, deposits held by trustees under bond agreements for

current principal and interest payments, receivables, current portion of investments and other current assets.

Noncurrent assets consist of deposits held by trustees under agreements for capital activities, investments,

loans receivable and net capital assets. Deferred outflows of resources consist of those related to pensions and

the loss on bond refinancing. Current liabilities consist of accounts payable and accrued expenses, unearned

revenue and the current portion of bonds payable, other long-term debt and capital lease obligations.

Noncurrent liabilities consists of compensated absences, unearned revenue, other liabilities, deposits held in

custody for others, bonds payable, net pension liability and other long-term debt. Deferred inflows of resources

consist of those related to pensions, the gain on bond refinancing and service concession arrangement.

Fiscal Year 2018 Compared to 2017

The University’s total assets and deferred outflows of resources decreased $19.1 million from $1,341.9 million

at June 30, 2017 to $1,322.8 million at June 30, 2018. Current assets decreased $6.5 million, capital assets

decreased $5.4 million, other noncurrent assets increased $8.5 million and deferred outflows of resources

decreased $15.8 million. Within current assets, cash and cash equivalents decreased $19.3 million.

Net capital assets decreased approximately $5.4 million primarily due to an increase of $38.4 million in assets,

offset by depreciation of $49.0 million.

Other noncurrent assets increased $8.5 million for the year ended June 30, 2018. The increase is primarily due

to a $20.7 million increase in investments, offset by a decrease of $13.1 million in restricted deposits held by

trustees which is driven by the drawdown of State of New Jersey capital project funds and other construction

funds.

Deferred outflows of resources decreased $15.8 million primarily due to the recognition of a $16.5 million

reduction of deferred outflows of resources in fiscal year 2018 related to pensions in accordance with GASB 68.

Additionally the loss on bond refinancing increased $0.7 million primarily due to series 2017 A and 2017 B bond

issuance, which refunded and redeemed all of the 2007 B Bonds and pay the costs and expenses incurred in

the issuance of the 2017A and 2017B bonds.

ROWAN UNIVERSITY



June 30, 2018

6 (Continued)

Current liabilities increased $5.7 million. The increase is primarily attributed to the $5.7 million increase in the

current portion of long term debt, offset by $0.3 million decrease in unearned revenue due to student revenues

received in advance.

Noncurrent liabilities decreased $64.4 million. This decrease is due primarily to a decrease in net pension

liabilities of approximately $42.0 million, a decrease in long-term debt of $20.3 million, and a decrease in

unearned revenue of $2.8 million.

Deferred inflows of resources increased $34.5 million due primarily to the increase of $38.8 million in pension

related deferred inflows of resources, offset by a $2.6 million reduction the service concession arrangement.

Total net position increased by $5.0 million at June 30, 2018 which is primarily the result of a $3.0 million

increase in unrestricted net position, a $1.1 million increase the expendable restricted net position, and a

$0.9 million increase of net investment of capital assets.

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Assets and DeferredOutflows of resources

Liabilities and DeferredInflows of Resources

Net Position (Deficit)

Summary of Statement of Net PositionAs of June 30(In thousands)

2018 2017

ROWAN UNIVERSITY



June 30, 2018

7 (Continued)

Statement of Revenues, Expenses, and Changes in Net Position

The year to year changes in total net position as presented on the Statement of Net Position are based on the

activity presented in the Statement of Revenues, Expenses, and Changes in Net Position. The purpose of the

statement is to present the revenues received by the University, both operating and nonoperating, and the

expenses paid by the University, operating and nonoperating, and any other revenues, expenses, gains, and

losses received or spent by the University.

Generally speaking, operating revenues are received for providing goods and services to the various customers

and constituencies of the University. Operating expenses are those expenses paid to acquire or produce the

goods and services provided in return for the operating revenues, and to carry out the mission of the University.

Nonoperating revenues are revenues received for which goods and services are not provided. For example,

state appropriations are nonoperating because they are provided by the State to the University without the

State directly receiving commensurate goods and services for those revenues.

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-$150,000

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2018 2017

Comparative Net Position (Deficit)As of June 30(In thousands)

Net Investment in Capital Assets Restricted Unrestricted

ROWAN UNIVERSITY



June 30, 2018

8 (Continued)

The Statements of Revenues, Expenses, and Changes in Net Position present the University’s results of

operations. A summary of the University’s revenues, expenses, and changes in net position for the years ended

June 30, 2018 and 2017, as follows:

2018 2017

(In thousands)

Operating revenues:

Net student revenues $ 256,865 247,261

Grants 73,505 64,269

Professional services and contracts 54,094 54,815

Other 9,390 8,024

Total operating revenues 393,854 374,369

Operating expenses 559,968 517,567

Operating loss (166,114) (143,198)

Nonoperating revenues (expenses):

State appropriations 185,707 157,313

Gifts 11,062 9,308

Investment income 2,216 1,562

Interest on capital asset related debt (36,689) (35,496)

Other nonoperating revenues (expenses), net 2,973 6,917

Net nonoperating revenues (expenses) 165,269 139,604

Loss before other revenues (845) (3,594)

Capital grants 5,824 39,689

Increase in net position 4,979 36,095

Net position – beginning of year 92,804 56,709

Net position – end of year $ 97,783 92,804


The University’s net position increased $4.9 million in fiscal year 2018. This net amount represents the total

revenue available to the University of $601.6 million compared to total expenses of $596.7 million.

ROWAN UNIVERSITY



June 30, 2018

9 (Continued)

Revenues

To fund its operations, the University receives revenues from a variety of operating and nonoperating sources

including tuition and fees, auxiliary services, grants, professional services and contracts, State of New Jersey

appropriations, gifts from the Rowan University Foundation and investment income. The University is

continuing to seek additional funds from all possible sources to adequately fund operating activities. A summary

of operating revenues for the years ended June 30, 2018 and 2017 as follows:

2018 2017

Percentage Percentage

Amount of total Amount of total

(Amounts in thousands)

Operating revenues:

Net student revenues $ 256,865 65.2 % $ 247,261 66.1 %

Grants 73,505 18.7 64,269 17.2

Professional services and

contracts 54,094 13.7 54,815 14.6

Other 9,390 2.4 8,024 2.1

Total operating revenues $ 393,854 100.0 % $ 374,369 100.0 %

Operating Revenues


Operating revenues for fiscal year ended June 30, 2018 increased $19.5 million over fiscal year 2017. The

majority of this increase is due to an increase in net student revenues of $9.6 million and an increase of

$9.2 million in grants, offset by a $0.7 million decrease in professional services and contracts. The increase in

net student revenues is due to increases in enrollment and tuition and fee rates. The increase in grants is due

to the University’s efforts in increasing grant revenue from federal, state and private funding sources.

Nonoperating Revenues (Net)


Nonoperating revenues (net) for the years ended June 30, 2018 and 2017 totaled $165.3 million and

$139.6 million, respectively, which is a $25.7 million increase. The primary sources of the increase were

$28.4 million increase in the State of New Jersey appropriations, $1.2 million decrease in interest on capital

asset related debt, as well as $3.9 million decrease in other nonoperating revenues and expenses. State of

New Jersey appropriations include the University base appropriation as well as appropriations for the Cooper

Medical School of Rowan University, the School of Osteopathic Medicine, OPEB revenues and the State paid

fringe benefits. The University recorded $185.7 million and $157.3 million in State appropriations for fiscal year

2018 and 2017, respectively. For the year ended June 30, 2018, the University adopted GASB Statement No.

75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB 75) which

resulted in the addition of State of New Jersey appropriations - OPEB nonoperating revenues of $32.6 million.

ROWAN UNIVERSITY



June 30, 2018

10 (Continued)

Capital grants decreased in fiscal year 2018 by $33.9 million primarily due to the completion of the Rohrer

College of Business and the College of Engineering buildings in fiscal year 2017 which was part of the

University’s capital grants awarded through the New Jersey Higher Education Capital Financing Grant

Program.

Operating Expenses

Operating expenses are defined as expenses paid by the University to acquire or produce goods and services

used to carry out its mission, in return for operating revenues. For the years ended June 30, 2018 and 2017,

the University incurred operating expenses totaling $560.0 million and $517.6 million, respectively. The

increase of $42.4 million in operating expenses for fiscal year 2018 versus 2017 is an eight percent increase

from the prior year. The increase is primarily driven by the adoption of GASB 75 and the recognition of OPEB

expense of $32.6 million.

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Revenue by SourceFor the Years Ended June 30

(In thousands)

2018

2017

ROWAN UNIVERSITY



June 30, 2018

11 (Continued)

A summary of operating expenses for the years ended June 30, 2018 and 2017 follows:

2018 2017

Percentage Percentage

Amount of total Amount of total

(Amounts in thousands)

Instruction $ 161,630 28.9 % $ 168,173 32.5 %

Research 16,524 3.0 % 13,512 2.6 %

Public service 8,113 1.5 % 8,867 1.7 %

Academic support 45,698 8.1 % 46,767 9.0 %

Student service 31,067 5.6 % 29,751 5.7 %

Institutional support 76,742 13.7 % 71,864 13.9 %

Operation and maintenance of plant 36,968 6.6 % 33,933 6.6 %

Student aid 15,443 2.7 % 13,722 2.7 %

Professional services and contracts 53,960 9.6 % 56,717 11.0 %

Auxiliary enterprises 34,762 6.2 % 34,959 6.8 %

Other Postemployment Benefits (OPEB) 32,606 5.8 % — — %

Depreciation and amortization 46,455 8.3 % 39,302 7.5 %

Total operating expenses $ 559,968 100.0 % $ 517,567 100.0 %

Capital Assets and Debt Activities

The University continues to manage its financial resources so as to ensure adequate financial flexibility to

access the capital markets as needed. The University maintains debt ratings from Standard and Poor’s and

Moody’s Investors Service of A and A2, respectively.

As of June 30, 2018 and 2017, the University had $218.2 million and $217.3 million, respectively in net

investment in capital assets. Outstanding long-term debt as of June 30, 2018 is $638.6 million, compared to

$653.2 million as of June 30, 2017.

Significant transactions related to capital assets and bonded debt that occurred during fiscal year 2018 were as

follows:

In July 2017, the Gloucester County Improvement Authority (GCIA) issued Rowan University 2017A and 2017B

bonds. The 2017A tax exempt revenue refunding bonds totaled $73.5 million with coupon rates ranging from

3.000% to 5.000% and maturing through 2033. The 2017B taxable revenue refunding bonds totaled

$4.2 million with coupon rates ranging from 1.850% to 2.100% and maturing through 2019. The proceeds from

these bond issuances were used to refund and redeem all of NJEFA’s Rowan University Series 2007B bonds

and pay the costs and expenses incurred in the issuance of the 2017A and 2017B bonds.

ROWAN UNIVERSITY



June 30, 2018

12

In August 2017, Glassboro A-3 Urban Renewal, LLC (the Developer) opened the A3 building situated at

Victoria Street and Mick Drive in the Borough of Glassboro. The University commenced two operating lease

agreements with the Developer for an initial lease term of 15 years to lease approximately 29,570 square feet

for academic classrooms and offices, and approximately 17,577 square feet for a fitness center.

Economic Outlook

State appropriations remain a vital source of funding for the University and the current budgetary issues with

the State may have a negative impact on future funding. The University’s unrestricted general operations

appropriation from the State decreased $11.1 million from fiscal year 2017 to fiscal year 2018 due to the effects

of the New Jersey Medicaid Access to Physician Services (NJ MAPS) program within the New Jersey Medicaid

program. The NJ MAPS program is entirely being funded by transfers of existing State Legislative

appropriations, mostly from the parent universities of the medical schools. The University expects to continue to

experience uncertainty in its future level of State support. With increasing costs, particularly resulting from

contractual obligations with faculty and staff and debt service, the University faces critical funding issues.

Additionally, the University’s desire to increase institutionally funded scholarships, continue building its

academic program excellence and improve its capital assets will also impact the University’s financial outlook.

The University will continue to meet the goals of its mission by monitoring operating costs and capital

expenditures while seeking additional revenue sources. The University will continue to monitor the situation and

maintain a close watch over resources so as to provide the University with the ability to react to potential

budgetary challenges that may occur.

Through the process of continuing strategic planning and self-assessment, the University is committed in its

efforts to continue to enrich the lives of those in the campus community and surrounding region.

ROWAN UNIVERSITY(A Component Unit of the State of New Jersey)

Statement of Net Position

June 30, 2018

South JerseyRowan Technology

Rowan University Park at RowanAssets University Foundation University, Inc. Total

Current assets:Cash and cash equivalents (notes 2 and 12) $ 67,291,615 8,707,774 1,375,684 77,375,073 Restricted cash and cash equivalents (notes 2 and 12) 1,430,414 3,897,815 — 5,328,229

Receivables:Students, less allowance of $1,367,857 5,585,829 — — 5,585,829 Contributions, net — 12,561 — 12,561 Restricted contributions, net — 274,948 — 274,948 Grants, less allowance of $241,834 13,415,565 — — 13,415,565 State of New Jersey 12,282,966 — — 12,282,966 Professional services and contracts receivable, less allowance of $2,145,660 10,971,556 — — 10,971,556 Due from Rowan component unit 2,125,297 — 14,591 2,139,888 Interest and other 1,646,580 — 4,640 1,651,220

Total receivables 46,027,793 287,509 19,231 46,334,533

Restricted deposits held by trustees (note 3) 26,195,005 — — 26,195,005 Investments, at fair value (notes 2 and 12) 63,490,887 — — 63,490,887 Other current assets 2,633,214 — — 2,633,214

Total current assets 207,068,928 12,893,098 1,394,915 221,356,941

Noncurrent assets:Restricted deposits held by trustees (note 3) 27,513,932 — — 27,513,932 Investments, at fair value (notes 2 and 12) 59,546,572 50,191,293 — 109,737,865 Restricted investments, at fair value (note 12) — 22,466,864 — 22,466,864 Restricted nonexpendable investments, at fair value (note 12) — 143,283,589 — 143,283,589 Loans receivable 4,367,986 — — 4,367,986 Other non current assets 800,000 — — 800,000 Contributions receivable, net — 7,898 — 7,898 Restricted contributions receivable, net — 1,541,592 — 1,541,592 Capital assets, net (notes 4 and 11) 930,462,842 — 9,979,032 940,441,874

Total noncurrent assets 1,022,691,332 217,491,236 9,979,032 1,250,161,600

Total assets $ 1,229,760,260 230,384,334 11,373,947 1,471,518,541

Deferred Outflows of Resources

Deferred outflows of resources:Pensions related (note 6) $ 72,616,180 — — 72,616,180 Loss on bond refinancing 20,456,237 — — 20,456,237

Total deferred outflows of resources $ 93,072,417 — — 93,072,417

Liabilities

Current liabilities:Accounts payable and accrued expenses (note 7) $ 48,608,838 84,030 171,931 48,864,799 Due to University/ component units 14,591 2,125,297 — 2,139,888 Unearned revenue 22,799,693 44,239 — 22,843,932 Other current liabilities 780,050 — — 780,050 Annuities payable – current portion — 37,630 — 37,630 Long-term debt – current portion (notes 8 and 9) 23,766,267 — 204,511 23,970,778

Total current liabilities 95,969,439 2,291,196 376,442 98,637,077

Noncurrent liabilities (note 9):Compensated absences – noncurrent portion (notes 9 and 11) 2,353,564 — — 2,353,564 Unearned revenue 9,151,102 — — 9,151,102 Other liabilities 2,661,725 — — 2,661,725 Repurchase liability 3,220,000 — — 3,220,000 Deposits held in custody for others 2,134,428 — — 2,134,428 Annuities payable – noncurrent portion — 269,771 — 269,771 Net pension liabilities (note 6) 313,603,691 — — 313,603,691 Long-term debt – noncurrent portion (notes 8 and 9) 614,790,811 — 4,552,814 619,343,625

Total noncurrent liabilities 947,915,321 269,771 4,552,814 952,737,906

Total liabilities $ 1,043,884,760 2,560,967 4,929,256 1,051,374,983

Deferred Inflows of Resources

Deferred inflows of resources:Pensions related (note 6) $ 56,144,397 — — 56,144,397 Gain on bond refinancing 168,044 — — 168,044 Developer contribution 6,520,000 — — 6,520,000 Service concession arrangement (note 11) 118,332,111 — — 118,332,111 Split interest agreements — 288,024 — 288,024

Total deferred inflows of resources $ 181,164,552 288,024 — 181,452,576

Net Position

Net investment in capital assets $ 218,155,779 — 5,221,707 223,377,486 Restricted:

Nonexpendable (note 12) — 143,283,589 — 143,283,589 Expendable:

Debt service and reserve 17,920,163 — — 17,920,163 Other scholarships — 11,950,958 — 11,950,958 Other 4,303,178 15,758,025 — 20,061,203

Unrestricted (142,595,755) 56,542,771 1,222,984 (84,830,000)

Total net position $ 97,783,365 227,535,343 6,444,691 331,763,399

See accompanying notes to basic financial statements.

13


Statement of Revenues, Expenses, and Changes in Net Position

Year ended June 30, 2018

South JerseyRowan Technology

Rowan University Park at RowanUniversity Foundation University, Inc. Total

Operating revenues:Net student revenues:

Tuition and fees $ 259,530,951 — — 259,530,951 Auxiliary enterprises 52,125,844 — — 52,125,844 Less scholarship allowances (54,791,624) — — (54,791,624)

Net student revenues 256,865,171 — — 256,865,171

Grants 73,505,223 — — 73,505,223 Self-funded programs 6,030,330 — — 6,030,330 Fundraising events — 27,475 — 27,475 Contributions — 9,177,708 — 9,177,708 Net professional services and contracts (note 10) 54,093,950 — — 54,093,950 Rental income (note 13) — — 1,135,604 1,135,604 Other operating revenues 2,945,327 35,720 — 2,981,047 Other auxiliary 414,291 — — 414,291

Total operating revenues 393,854,292 9,240,903 1,135,604 404,230,799

Operating expenses:Instruction 161,629,856 — — 161,629,856 Research 16,524,323 — — 16,524,323 Public service 8,112,835 — — 8,112,835 Academic support 45,697,963 — — 45,697,963 Student services 31,066,714 — — 31,066,714 Institutional support 76,742,340 491,782 627,124 77,861,246 Operation and maintenance of plant 36,967,678 — — 36,967,678 Student aid 15,443,483 — — 15,443,483 Professional services and contracts 53,960,481 — — 53,960,481 Auxiliary enterprises 34,761,848 — — 34,761,848 Other Postemployment Benefits (OPEB) (note 6) 32,605,585 — — 32,605,585 Depreciation and amortization 46,455,109 — 386,432 46,841,541

Total operating expenses 559,968,215 491,782 1,013,556 561,473,553

Operating (loss) income (166,113,923) 8,749,121 122,048 (157,242,754)

Nonoperating revenues (expenses):State of New Jersey appropriations 29,807,000 — — 29,807,000 State of New Jersey appropriations – CMSRU 12,448,763 — — 12,448,763 State of New Jersey appropriations – Rowan SOM 29,192,743 — — 29,192,743 State of New Jersey appropriations – OPEB (note 6) 32,605,585 — — 32,605,585 State of New Jersey fringe benefits (note 5) 81,652,278 — — 81,652,278 Student scholarships — (2,693,154) — (2,693,154) Gifts from Rowan University Foundation (note 12) 11,061,684 (11,061,684) — — Other grants — (12,179) — (12,179) Investment income, net 2,216,325 14,317,734 7,153 16,541,212 Interest on capital asset related debt (36,688,784) — (169,619) (36,858,403) Other nonoperating revenues (expenses), net 2,973,410 1,555,843 705 4,529,958

Net nonoperating revenues (expenses) 165,269,004 2,106,560 (161,761) 167,213,803

(Loss) income before other revenues (844,919) 10,855,681 (39,713) 9,971,049

Capital grants and gifts 5,824,109 — — 5,824,109 Additions to permanent endowments — 9,427,806 — 9,427,806

Increase (decrease) in net position 4,979,190 20,283,487 (39,713) 25,222,964

Net position as of beginning of year (note 12) 92,804,175 207,251,856 6,484,404 306,540,435

Net position as of end of year $ 97,783,365 227,535,343 6,444,691 331,763,399


14


Statement of Cash Flows

(Business-Type Activities – Rowan University only)


2018

Cash flows from operating activities:Student revenues $ 254,198,810 Government and private grants 86,361,191 Professional services and contract 51,754,136 Payments to suppliers (98,832,023) Payments for employee salaries and benefits (283,250,611) Self-funded programs and other receipts 6,030,330

Net cash provided by operating activities 16,261,833

Cash flows from noncapital financing activities:State of New Jersey appropriations 71,448,506 Gifts 11,061,684 Receipts for other noncapital assets (3,290,641) Payments made for other nonoperating expenses 2,973,410

Net cash provided by noncapital financing activities 82,192,959

Cash flows from capital and related financing activities:Proceeds from bond issuance 89,372,120 Payment on refunding of bond (88,406,774) Drawdown of restricted deposits held by trustees 13,835,341 Capital grants 2,989,195 Costs of issuance (965,346) Purchases of capital assets (46,370,528) Principal paid on capital debt (14,354,007) Interest paid on capital debt (38,926,380)

Net cash used by capital and related financing activities (82,826,379)

Cash flows from investing activities:Purchase of investments 171,507,046 Sale of investments (208,239,903) Interest on investments 1,795,233

Net cash used by investing activities (34,937,624)

Net decrease in cash and cash equivalents (19,309,211)

Cash and cash equivalents as of beginning of the year 88,031,240

Cash and cash equivalents as of end of the year $ 68,722,029

Reconciliation of operating loss to net cash used by operating activities:Operating loss $ (166,113,923) Adjustments to reconcile operating loss to net cash used by operating activities:

State paid fringe benefits 81,652,278 State paid postemployement benefits 32,605,585 Depreciation and amortization expense 46,455,109 Changes in assets and liabilities:

Receivables 5,552,576 Other current assets 478,682 Note receivable (800,000) Accounts payable and accrued expenses 2,466,369 Unearned revenue (295,083) Student deposits 109,157 Other liabilities 286,444 Deposits held in custody for others 448,946 Compensated absences – noncurrent portion 79,164 Net pension liability, net of deferred amounts 13,336,529

Net cash provided by operating activities $ 16,261,833

Noncash transaction:Noncash gifts $ 1,055,573 Unrealized loss on investments (148,610)


15

ROWAN UNIVERSITY


Notes to Basic Financial Statements

June 30, 2018

16 (Continued)

(1) Organization and Summary of Significant Accounting Policies

(a) Organization Rowan University (the University), formerly Rowan College of New Jersey, was founded in 1923 and

effective July 1, 1967, came under the general policy control of the New Jersey Board of Higher

Education. Under the Higher Education Act of 1966, the University and all the other New Jersey State

colleges became multipurpose institutions of higher education with an emphasis on the liberal arts and

sciences and various professional areas including the science of education and the art of teaching. The

operation and management of the University is vested in the University’s board of trustees.

The University is recognized as a public institution by the State of New Jersey (the State). Under the

law, the University is an instrumentality of the State with a high degree of autonomy. However, the

University is considered a component unit of the State for financial reporting purposes. Accordingly, the

financial statements of the University are included in the State’s Comprehensive Annual Financial

Report.

On August 22, 2012 Governor Christie signed the “New Jersey Medical and Health Sciences Education

Restructuring Act” (the Law) into law. Effective July 1, 2013, the School of Osteopathic Medicine (SOM)

in Stratford, NJ (formerly under the University of Medicine and Dentistry of New Jersey (UMDNJ)) was

integrated with the University. The Law also establishes the University as a public research institution.

(b) Summary of Significant Accounting Policies (i) Basis of Presentation

The accounting policies of the University conform to accounting principles generally accepted in the

United States of America as applicable to public colleges and universities. The University reports

are based on all applicable Governmental Accounting Standards Board (GASB) pronouncements.

GASB Statement No. 35, Basic Financial Statements and Management’s Discussion and Analysis for Public Colleges and Universities – an amendment of GASB Statement No. 34 (GASB 35),

establishes standards for external financial reporting for public colleges and universities and

requires that resources be classified for accounting and reporting purposes into the following net

position categories:

• Net investment in capital assets: Capital assets, net of accumulated depreciation and

outstanding principal balances of debt attributable to the acquisition, construction, or

improvement of those assets.

ROWAN UNIVERSITY



June 30, 2018

17 (Continued)

• Restricted:

Nonexpendable – Net position subject to externally imposed stipulations that must be

maintained permanently by the University.

Expendable – Net position whose use by the University is subject to externally imposed

stipulations that can be fulfilled by actions of the University pursuant to the stipulations or that

expire by the passage of time.

• Unrestricted: Net position that is not subject to externally imposed stipulations. Unrestricted net

position may be designated for specific purposes by action of management or the board of

trustees.

When an expense is incurred that can be paid using either restricted or unrestricted resources, the

University’s policy is to first apply the expense towards restricted resources and then towards

unrestricted resources.

(ii) Measurement Focus and Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting

utilizing the economic resources measurement focus. The University reports as a business-type

activity, as defined by GASB Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments (GASB 34). Business-type activities are

those that are financed in whole or in part by fees charged to external parties for goods or services.

(iii) Cash and Cash Equivalents

The University classifies as cash equivalents, funds that are in short-term, highly liquid

investments, and are readily convertible to known amounts of cash with a portfolio maturity of

one year or less.

The University maintains portions of its cash with three custodians, two banks and the State of New

Jersey Cash Management Fund (NJCMF). All are interest-bearing accounts from which the funds

are available upon demand.

(iv) Investments

Investments are reflected at fair value. Purchases and sales of investments are accounted for on

the trade-date basis. Investment income is recorded on an accrual basis. Realized and unrealized

gains and losses are reported in investment income.

ROWAN UNIVERSITY



June 30, 2018

18 (Continued)

(v) Capital Assets

Capital assets include land, land improvements, buildings, and equipment. Such assets are

recorded at historical cost. Land improvements and building improvements costing over $50,000,

as well as equipment with a unit cost over $5,000 are capitalized. Donated capital assets, including

artwork, are recorded at the acquisition value at the date of donation. The costs of normal

maintenance and repairs that do not add value to the asset are not capitalized. Major outlays for

capital assets are capitalized as projects are constructed. Artwork is considered inexhaustible and

is not depreciated. Capital assets are depreciated using the straight-line method over the following

useful lives:

Useful lives

Land improvements 20 years

Buildings 20–40 years

Equipment 3–20 years

(vi) Deposits Held in Custody for Others

The University holds cash and cash equivalents as custodian primarily for the Student Government

Association.

(vii) Net Pension Liability and Related Pension Amounts

For purposes of measuring the net pension liability, deferred outflows of resources and deferred

inflows of resources related to pensions, and pension expense, information about the fiduciary net

position of the Public Employees’ Retirement System (PERS), the Police and Firemen’s Retirement

System (PFRS) and the Teachers’ Pension and Annuity Fund (TPAF), and additions to/deductions

from PERS’s, PFRS’s, and TPAF’s fiduciary net position have been determined on the same basis

as they are reported by PERS, PFRS and TPAF. For this purpose, benefit payments (including

refunds of employee contributions) are recognized when due and payable in accordance with the

benefit terms. Investments are reported at fair value. For additional information about PERS, PFRS

and TPAF, please refer to the State of New Jersey, Division of Pensions and Benefits’

Comprehensive Annual Financial Report (CAFR), which can be found at

www.state.nj.us/treasury/pensions/annrpts.shtml.

(viii) Financial Dependency

One of the University’s largest sources of revenue is appropriations from the State, which include

state paid fringe benefits. The University is economically dependent on these appropriations to

carry on its operations.

(ix) Student Tuition and Fees

Student tuition and fees are presented net of scholarships applied to student accounts, while other

payments made directly to students are presented as student aid expenses and are recognized in

the period incurred. Student tuition and fees collected in advance of the fiscal year are recorded as

unearned revenue in the accompanying statements of net position.

ROWAN UNIVERSITY



June 30, 2018

19 (Continued)

(x) Professional Services and Contract Revenues

Professional services and contract revenues include the operations of SOM faculty practice plans

and affiliated hospital billings. The professional services and contract revenues are recorded on an

accrual basis and reported at the estimated net realizable amounts from patients, third party payers

and others for services rendered. The house staff and affiliations revenues are recorded on an

actual basis based on contracts with various affiliated hospitals for reimbursement of salary, fringe

and malpractice charges incurred by SOM.

(xi) Grants and Contracts

All grants and contracts are recognized when all eligibility requirements for revenue recognition are

met which is generally the period in which related expenses are incurred. Amounts received from

grants and contracts for which eligibility requirements have not been met under the terms of the

agreement, are recorded as unearned revenue in the accompanying statements of net position.

(xii) Classification of Revenue

The University’s policy for defining operating activities in the statements of revenues, expenses,

and changes in net position are those that serve the University’s principal purpose and generally

result from exchange transactions such as the payment received for services and payment made

for the purchase of goods and services. Examples include (1) student tuition and fees, net of

scholarship allowances, (2) most Federal, State, and private grants and contracts, and

(3) professional services and contract revenue. Nonoperating revenues include activities that have

the characteristics of nonexchange transactions or do not result from the receipt or provision of

goods and services, such as operating appropriations from the state, private gifts, and investment

income.

(xiii) New Accounting Standard Adopted

In fiscal year 2018, the University adopted GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB 75). GASB 75 addresses

accounting and financial reporting for other postemployment benefits (OPEB) that are provided to

the employees of state and local governmental employers. This Statement established standards

for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of

resources, and expense/expenditures. For defined benefit OPEB, GASB 75 identifies the methods

and assumptions that are required to be used to project benefit payments, discount projected

benefit payments to their actuarial present value, and attribute that present value to periods of

employee service. The effect of adoption of GASB 75 resulted in the addition of OPEB operating

expense and State of New Jersey appropriations - OPEB nonoperating revenues of $32.6 million.

(xiv) Accounting Pronouncements Applicable to the University, Issued but Not Yet Effective

In November 2016, the GASB issued Statement No. 83, Certain Asset Retirement Obligations. This

Statement requires a government entity to recognize an asset retirement obligation when the

liability is incurred and reasonably estimable. The government entity would measure the obligation

based on its best estimate of the current value of outlays expected to be incurred. The

requirements of this Statement are effective for reporting period beginning after June 15, 2018

(fiscal year 2019). The University is evaluating the impact of this new standard.

ROWAN UNIVERSITY



June 30, 2018

20 (Continued)

In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. This Statement improves

the guidance regarding the identification of fiduciary activities for accounting and financial reporting

purposes and how those activities should be reported. The requirements of this Statement are

effective for reporting periods beginning after December 15, 2018 (fiscal year 2020). The University

is evaluating the impact of this new standard.

In June 2017, the GASB issued Statement No. 87, Leases. This statement improves accounting

and financial reporting for leases by governments. This statement increases the usefulness of

governments’ financial statements by requiring recognition of certain lease assets and liabilities for

leases that previously were classified as operating leases and recognized as inflows of resources

or outflows of resources based on the payment provisions of the contract. Under this Statement, a

lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a

lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby

enhancing the relevance and consistency of information about governments’ leasing activities.

GASB 87 will be effective for periods beginning after December 15, 2019 (fiscal year 2021). The

University is evaluating the impact of this new statement.

In March 2018, the GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. This Statement improves the information that is

disclosed in notes to the financial statements related to debt, including direct borrowings and direct

placements. It also clarifies which liabilities a government should include when disclosing

information related to debt. The requirements of this Statement are effective for reporting periods

beginning after June 15, 2018 (fiscal year 2019). The University is evaluating the impact of this new

standard.

In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. This Statement requires that interest cost incurred before the end of

a construction period be recognized as expense in the period in which the cost is incurred. As a

result, interest cost incurred before the end of a construction period will not be included in the

historical cost of a capital asset. The requirements of this Statement are effective for reporting

periods beginning after December 15, 2019 (fiscal year 2021). As a result of this Standard, the

University will no longer capitalize interest cost related to debt-financed construction projects

beginning in fiscal year 2021.

In August 2018, the GASB issued Statement No. 90, Majority Equity Interests. This Statement

improves the consistency and comparability of reporting a government’s majority equity interest in

a legally separate organization and to improve the relevance of financial statement information for

certain component units. It defines a majority equity interest and specifies that a majority equity

interest in a legally separate organization should be reported as an investment if a government’s

holding of the equity interest meets the definition of an investment. A majority equity interest that

meets the definition of an investment should be measured using the equity method, unless it is held

by a special-purpose government engaged only in fiduciary activities, a fiduciary fund, or an

endowment (including permanent and term endowments) or permanent fund. Those governments

and funds should measure the majority equity interest at fair value. The requirements of this

Statement are effective for reporting periods beginning after December 15, 2018 (fiscal year 2020).

The University is evaluating the impact of this new standard.

ROWAN UNIVERSITY



June 30, 2018

21 (Continued)

(xv) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted

in the United States of America requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosures of contingent assets and

liabilities at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting period. Actual results could differ from those estimates.

(xvi) Tax Status

The University is exempt from income taxes on related income pursuant to federal and state tax

laws as an instrumentality of the State.

(2) Cash, Cash Equivalents, and Investments

(a) Cash and Cash Equivalents Cash and cash equivalents consist of the following as of June 30, 2018:

Cash $ 67,178,361

State of New Jersey Cash Management

Fund 626,309

Money market accounts 917,359

Total cash and cash

equivalents $ 68,722,029

Cash and money market accounts were held at a depository and bank balances amounted to

$74,861,255 as of June 30, 2018. Of these amounts, $500,000 was FDIC insured, $2,975,806 was

uninsured and uncollateralized and the excess is collateralized pursuant to Chapter 64 of Title 18A of

New Jersey Statutes as of June 30, 2018.

The University participates in NJCMF wherein amounts also contributed by other State entities are

combined in a large-scale investment program. The University deposits in the NJCMF were $626,309

as of June 30, 2018. These amounts are collateralized in accordance with New Jersey Statute

52:18-16-1, but not in the University’s name.

The operations of the NJCMF are governed by statutes of the State and the provisions of the State

Investment Council Regulations for the purpose of determining authorized investments. The fair value

of the NJCMF is based on the number of shares held by the University and the market price of those

shares as of June 30, 2018. The NJCMF is unrated with an average portfolio maturity of less than

one year.

ROWAN UNIVERSITY



June 30, 2018

22 (Continued)

(b) Investments The University’s investments consist of the following as of June 30, 2018:

U.S. government treasury securities $ 14,868,533

U.S. government agency securities 999,830

U.S. corporate bonds 88,871,928

Foreign corporate bonds 752,786

Mutual funds – equity 4,273,693

Common stock – equity 174,500

Asset-backed securities 7,720,589

Commercial mortgage-backed securities 2,248,649

Municipal bonds 2,307,137

Collateralized mortgage obligations 819,814

Total investments $ 123,037,459

The University has an investment policy, which establishes guidelines for permissible investments.

Short-term investment options include, but are not limited to, the funds, municipal obligations, etc. that

are deemed appropriate and within the risk parameters as determined by the University Board of

Trustees and the University Executive Staff.

The University’s long-term investment options include, but are not limited to, the purchase of

U.S. Government agency obligations, U.S. government treasury securities, corporate bonds, and other

investment vehicles (i.e. mutual funds, asset backed securities, etc.) that are deemed appropriate and

within the University’s investment policy.

The University’s investments are subject to various risks. Among these risks are credit risk and interest

rate risk. Each one of these risks is discussed in more detail below.

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.

The credit risk of a debt instrument is measured by nationally recognized statistical rating agencies

such as Moody’s Investors Service, Inc. (Moody’s) and Standard and Poors (S&P). The University’s

investment policy requires that fixed income securities are rated Baa3/BBB – or higher by at least one

rating agency. At June 30, 2018, the University does not have investments in a single issuer of more

than 5% of its total investments and therefore does not have a concentration of credit risk.

ROWAN UNIVERSITY



June 30, 2018

23 (Continued)

The following tables summarize the agency ratings of the fixed income securities included in the

University’s investments as of June 30, 2018:

2018

S&P Rated Moody’s Rated

AAA AA A BBB Aaa Aa A Total

U.S. government treasury

securities $ — 14,868,533 — — — — — 14,868,533

U.S. government agency

securities — 999,830 — — — — — 999,830

U.S. corporate bonds 1,992,890 20,627,369 48,131,534 15,857,764 2,262,371 — — 88,871,928

Foreign corporate bonds 675,574 — — 77,212 — — — 752,786

Asset-backed securities 5,014,280 380,162 — — 2,326,147 — — 7,720,589

Commercial mortgage-

backed securities 232,498 410,389 — — 1,605,762 — — 2,248,649

Municipal bonds — 565,733 629,819 — 900,000 172,581 39,004 2,307,137

Collateralized mortgage

obligations — 819,814 — — — — — 819,814

Total $ 7,915,242 38,671,830 48,761,353 15,934,976 7,094,280 172,581 39,004 118,589,266

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of a debt

investment. The University’s investment policy does not specifically address limitations in the maturities

of investments. For the University, the following tables summarize the maturities of the fixed income

security investments as of June 30, 2018:

Investment maturities (in years)

Investment type Fair value Less than 1 1–5 6–10 More than 10

U.S. government treasury

securities $ 14,868,533 10,927,083 3,941,450 — —

U.S. government agency

securities 999,830 999,830 — — —

U.S. corporate bonds 88,871,928 45,017,887 42,870,341 — 983,700

Foreign corporate bonds 752,786 675,574 77,212 — —

Asset-backed securities 7,720,589 159,243 6,367,130 856,817 337,399

Commercial mortgage-backed

securities 2,248,649 687,889 410,388 — 1,150,372

Municipal bonds 2,307,137 514,832 492,305 200,000 1,100,000

Collateralized mortgage

obligations 819,814 60,356 393,073 230,434 135,951

Total $ 118,589,266 59,042,694 54,551,899 1,287,251 3,707,422

ROWAN UNIVERSITY



June 30, 2018

24 (Continued)

(c) Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in

an orderly transaction between market participants at the financial statement measurement date. The

fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into

three levels as follows:

• Level 1 – quoted prices for identical assets or liabilities in active markets that a government can

access at the measurement date.

• Level 2 – quoted prices other than those included within Level 1 and other inputs that are

observable for an asset or liability, either directly or indirectly.

• Level 3 – pricing inputs are unobservable for the asset or liability and include situations where there

is little, if any, market activity or the investment.

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3.

When the fair value of an asset or a liability is measured using inputs from more than one level of the

fair value hierarchy, the measurement is considered to be based on the lowest priority level that is

significant to the entire measurement.

The categorization of a financial instrument within the hierarchy is based upon pricing transparency and

is not necessarily an indication of the University’s perceived risk of that instrument.

The following is a description of the valuation methodologies used for instruments measured at fair

value:

• U. S. government treasury securities and agency securities – The fair value of government

securities and agencies are based on institutional bond quotes and evaluations based on various

market and industry inputs.

• U. S. and foreign corporate bonds – The fair value of corporate bonds are based on institutional

bond quotes and evaluations based on various market and industry inputs.

• Common stocks and mutual funds – equity – The fair value of mutual funds are based on quoted

market prices, when available, or market prices provided by recognized broker-dealers.

• Asset backed securities, mortgages, commercial mortgage-backed securities and collateralized

mortgage obligations – The fair value of asset backed securities, mortgages, commercial

mortgage-backed securities, and collateralized mortgage obligations are based on various market

and industry inputs and quotes from market makers and other brokers recognized to be market

participants.

• Municipal bonds – The fair value of municipal bonds are based on various market and industry

inputs.

ROWAN UNIVERSITY



June 30, 2018

25 (Continued)

The University’s financial instruments as of June 30, 2018 are summarized in the following table by

their fair value hierarchy:

Total Level 1 Level 2 Level 3

Investments:

U. S. government treasury securities $ 14,868,533 — 14,868,533 —

U. S. government agency securities 999,830 — 999,830 —

U. S. corporate bonds 88,871,928 — 88,871,928 —

Foreign corporate bonds 752,786 — 752,786 —

Mutual funds – equity 4,273,693 4,273,693 — —

Common stock – equity 174,500 174,500 — —

Asset-backed securities 7,720,589 — 7,720,589 —

Commercial mortgage-backed

securities 2,248,649 — 2,248,649 —

Municipal bonds 2,307,137 — 2,307,137 —

Collateralized mortgage obligations 819,814 — 819,814 —

Total investments $ 123,037,459 4,448,193 118,589,266 —

(3) Restricted Deposits Held by Trustees

Restricted deposits held by trustees include restricted funds held by three Board approved trustees.

Deposits held by trustees consist of cash and money market investments, which are measured at

amortized cost. The money market investments were unrated. Restricted deposits held by trustees include

funds for construction, debt service reserve, and debt service and consist of the following as of June 30,

2018:

Construction funds $ 27,513,932

Debt service and debt service reserve funds 26,195,005

53,708,937

Less current portion 26,195,005

Noncurrent restricted deposits held by trustees $ 27,513,932

ROWAN UNIVERSITY



June 30, 2018

26 (Continued)

(4) Capital Assets

The detail of capital assets activity for the years ended June 30, 2018 is as follows:

Beginning Additions/ Deletions/ Ending

2018 balance Transfers transfers balance

Nondepreciable assets:

Land $ 50,569,091 164,470 — 50,733,561

Artwork 2,770,624 393,866 — 3,164,490

Construction in progress 31,897,871 29,641,709 (48,104,613) 13,434,967

Total nondepreciable

assets 85,237,586 30,200,045 (48,104,613) 67,333,018

Depreciable assets:

Land improvements 55,071,590 2,554,044 — 57,625,634

Buildings 1,154,084,386 48,015,664 (1,239,280) 1,200,860,770

Equipment 60,293,467 11,409,782 (4,474,608) 67,228,641

Total depreciable

assets 1,269,449,443 61,979,490 (5,713,888) 1,325,715,045

Less accumulated depreciation:

Land improvements 23,440,293 2,927,418 — 26,367,711

Buildings 361,517,911 38,873,946 (1,016,167) 399,375,690

Equipment 33,853,069 7,172,407 (4,183,656) 36,841,820

Total accumulated

depreciation 418,811,273 48,973,771 (5,199,823) 462,585,221

Total capital assets, net $ 935,875,756 43,205,764 (48,618,678) 930,462,842

Depreciation expense for the year ending June 30, 2018 is $48,973,771. The estimated cost to complete

capital projects included in construction in progress as of June 30, 2018 approximates $55,727,000.

Anticipated financing for these projects is approximately $13,622,000 in grant funds, $10,910,000 in bond

funding and $31,195,000 in University funds.

ROWAN UNIVERSITY



June 30, 2018

27 (Continued)

(5) State of New Jersey Fringe Benefits

The State, through separate appropriations, pays certain fringe benefits, principally health benefits and

FICA taxes, on behalf of University employees and retirees. The costs of these benefits was $81,652,278

for fiscal year 2018, were paid directly by the State on behalf of the University and are included in the

accompanying financial statements as State of New Jersey fringe benefits revenue and as expenses.

(6) Retirement Plans

The University participates in several retirement plans, administered by the State of New Jersey, Division of

Pensions and Benefits (the Division), covering its employees – the Public Employees’ Retirement System,

the Police and Firemen’s Retirement System, the Teachers’ Pension and Annuity Fund, the Alternate

Benefit Program (ABP), and the Defined Contribution Retirement Program (DCRP). PERS, PFRS and

TPAF are cost-sharing, multiple-employer defined benefit retirement plans, while ABP and DCRP are

defined contribution retirement plans. Generally all employees, except certain part-time employees,

participate in one of these plans. The University is charged for pension costs through a fringe benefit

charge assessed by the State which is included with the State of New Jersey fringe benefits in the

accompanying financial statements (see note 5).

A publicly available CAFR of the State of New Jersey, Division of Pensions and Benefits, which includes

financial statements, required supplementary information, and detailed information about the PERS’s,

PFRS’s, and TPAF’s fiduciary net position, can be obtained at www.state.nj.us/treasury/pensions/

annrprts.shtml or by writing to the State of New Jersey, Department of the Treasury, Division of Pensions

and Benefits, P.O. Box 295, Trenton, NJ 08625-0295.

(a) Defined Benefit Pension Plans General Information

(i) Public Employees’ Retirement System

Plan description – PERS was established under the provisions of N.J.S.A. 43:15A to provide

retirement, death and disability benefits to substantially all full-time employees of the State or any

county, municipality, school district or public agency, provided the employee is not required to be a

member of another state-administered retirement system or other state pension fund or local

jurisdiction’s pension fund.

Benefits provided – All benefits vest after ten years of service, except for medical benefits, which

vest after 25 years of service or under the disability provisions of PERS.

ROWAN UNIVERSITY



June 30, 2018

28 (Continued)

The following represents the membership tiers for PERS:

Tier Definition

1 Members who were enrolled prior to July 1, 2007

2 Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008

3 Members who were eligible to enroll on or after November 2, 2008 and prior to May 22, 2010

4 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011

5 Members who were eligible to enroll on or after June 28, 2011

Service retirement benefits of 1/55th of final average salary for each year of service credit is

available to tiers 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching

age 62. Service retirement benefits of 1/60th of final average salary for each year of service credit

is available to tier 4 members upon reaching age 62 and tier 5 members upon reaching age 65.

Early retirement benefits are available to tiers 1 and 2 members before reaching age 60, tiers 3 and

4 before age 62 with 25 or more years of service credit and tier 5 with 30 or more years of service

credit before age 65. Benefits are reduced by a fraction of a percent for each month that a member

retires prior to the age at which a member can receive full early retirement benefits in accordance

with their respective tier. Tier 1 members can receive an unreduced benefit from age 55 to age 60

if they have at least 25 years of service. Deferred retirement is available to members who have at

least 10 years of service credit and have not reached the service retirement age for the respective

tier.

Contributions – The contribution policy is set by N.J.S.A. 43:15A and requires contributions by

active members and contributing employers. Members contribute at a uniform rate. The member

contribution rate at June 30, 2018 was 7.34% of pensionable wages. The State contributes the

employer’s share on behalf of the University. The State’s pension contribution is based on an

actuarially determined amount which includes the employer portion of the normal cost and an

amortization of the unfunded accrued liability. The University’s contributions to PERS (amounts

paid by the State on behalf of the University) for the fiscal year ended June 30, 2018 was

$7,325,414.

(ii) Police and Firemen’s Retirement System

Plan description – PFRS was established under the provisions of N.J.S.A 43:16A to provide

retirement, death and disability benefits to substantially all full time county and municipal police or

firemen and state firemen or officer employees with police powers appointed after June 30, 1944.

Benefits provided – All benefits vest after ten years of service, except disability benefits, which vest

after four years of service.

ROWAN UNIVERSITY



June 30, 2018

29 (Continued)

The following represents the membership tiers for PFRS:

Tier Definition

1 Members who were enrolled prior to May 22, 2010



Service retirement benefits are available at age 55 and are generally determined to be 2% of final

compensation for each year of creditable service, as defined, up to 30 years plus 1% for each year

of service in excess of 30 years. Members may seek special retirement after achieving 25 years of

creditable service, in which benefits would equal 65% (tiers 1 and 2 members) and 60% (tier 3

members) of final compensation plus 1% for each year of creditable service over 25 years but not

to exceed 30 years. Members may elect deferred retirement benefits after achieving ten years of

service, in which case benefits would begin at age 55 equal to 2% of final compensation for each

year of service.

Contributions – The contribution policy is set by N.J.S.A. 43:16A and requires contributions by

active members and contributing employers. The State contributes the employer’s share on behalf

of the University. The State’s contribution amount is based on an actuarially determined rate which

includes the normal cost and unfunded accrued liability. The member contribution rate at June 30,

2018 was 10% of pensionable wages. The University’s contributions to PFRS (amounts paid by the

State on behalf of the University) for the fiscal year ended June 30, 2018 was $1,069,699.

(iii) Teachers’ Pension and Annuity Fund

Plan description – TPAF was established under the provisions of N.J.S.A. 18A:66 to provide

retirement, death and disability benefits to substantially all teachers or members of the professional

staff certified by the State Board of Examiners and employees of the State of New Jersey,

Department of Education, who have titles that are unclassified, professional, and certified. Certain

faculty members of the University participate in the TPAF. Under the provisions of N.J.S.A.

18A:66-33, the State is legally obligated to make contributions on behalf of all participating

employers to the plan, therefore TPAF meets the definition of a special funding situation as defined

in GASB Statement No. 68, Accounting and Financial Reporting for Pensions.

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June 30, 2018

30 (Continued)

Benefits provided – The vesting and benefit provisions are set by N.J.S.A. 18A:66. All benefits vest

after ten years of service, except for medical benefits, which vest after 25 years of service or under

the disability provisions of TPAF. Members are always fully vested for their own contributions and,

after three years of service credit, become vested for 2% of related interest earned on the

contributions. In the case of death before retirement, members’ beneficiaries are entitled to full

interest credited to the members’ accounts.

The following represents the membership tiers for TPAF:

Tier Definition

1 Members who were enrolled prior to July 1, 2007

2 Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008

3 Members who were eligible to enroll on or after November 2, 2008 and prior to May 22, 2010



Service retirement benefits of 1/55th of final average salary for each year of service credit is

available to tiers 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching

age 62. Service retirement benefits of 1/60th of final average salary for each year of service credit

is available to tier 4 members upon reaching age 62 and tier 5 members upon reaching age 65.

Early retirement benefits are available to tiers 1 and 2 members before reaching age 60, tiers 3 and

4 before age 62 with 25 or more years of service credit, and tier 5 before age 65 with 30 or more

years of service credit. Benefits are reduced by a fraction of a percent for each month that a

member retires prior to the retirement age for his/her respective tier. Deferred retirement is

available to members who have at least 10 years of service credit and have not reached the

service retirement age for the respective tier.

Contributions – The contribution policy is set by N.J.S.A. 18A:66 and requires contributions by

active members and contributing employers. The full normal employee contribution rates as of

July 1, 2018 was 7.34%. The State’s pension contribution is based on an actuarially determined

amount which includes the employer portion of the normal cost and an amortization of the

unfunded accrued liability.

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June 30, 2018

31 (Continued)

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows

of Resources Related to Pensions

The University’s respective net pension liability, deferred outflows of resources, deferred inflows of

resources and pension expense related to PERS and PFRS are calculated by the Division. At June 30,

2018, the University reported a liability of $295,481,815 and $18,121,876 for PERS and PFRS,

respectively, for its proportionate share of the respective PERS and PFRS net pension liabilities. As the

State is legally obligated to fund TPAF on behalf of the University, the University’s proportionate share

of net pension liability at June 30, 2018 of $1,479,732 is recognized by the State. The total pension

liabilities used to calculate the net pension liabilities, which were recorded in the statement of net

position as of June 30, 2018, were determined by actuarial valuations as of July 1, 2016 and rolled

forward to the measurement date of June 30, 2017. For PERS and PFRS, the University’s

proportionate share of the respective net pension liabilities for the fiscal year was based on the actual

contributions made by the State on behalf of the University relative to the total contributions of

participating employers of the State Group for each plan for fiscal year 2017. For TPAF, the

University’s proportionate share of the respective net pension liability for the fiscal year was based on

the actual contributions made by the State on behalf of the University relative to the total contributions

made by the State for fiscal year 2017. The University’s allocation percentages and pension expense

for each plan are as follows:

PERS PFRS TPAF

2017 Allocation percentage – State

Group/Nonemployer Group1 1.152 % 0.412 % 0.002 %

2017 Allocation percentage – Total

Plan2 0.604 % 0.084 % 0.002 %

Pension expense for the year ended

June 30, 2017 $ 20,668,447 1,625,442 102,508

1 – Allocation percentage for PERS and PFRS based on total State Group. Allocation percentage for

TPAF based on total Nonemployer Group.

2 – Allocation percentage calculated as the University’s respective net pension liability as a percentage

of the total plan’s net pension liability.

As TPAF is a special funding situation, the University recognized revenue related to the support

provided by the State as of June 30, 2018 of $102,508 in the State of New Jersey fringe benefits

amount on the statements of revenue, expenses and changes in net position.

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June 30, 2018

32 (Continued)

The University reported deferred outflows of resources and deferred inflows of resources related to

pensions from the following sources as of June 30, 2018:

PERS PFRS Total

Deferred outflows of resources:

Changes of assumptions $ 38,650,908 1,084,709 39,735,617

Changes in proportionate share 14,357,377 1,150,081 15,507,458

Differences between expected and

actual experience 6,769,706 — 6,769,706

Net differences between projected and

actual investment earnings on

pension plan investments 1,876,738 331,548 2,208,286

Contributions subsequent to the

measurement date 7,325,414 1,069,699 8,395,113

Total $ 68,980,143 3,636,037 72,616,180

Deferred inflows of resources:

Changes in proportionate share $ 12,086,791 448,423 12,535,214

Differences between expected and

actual experience — 234,936 234,936

Changes of assumptions 41,832,600 1,541,647 43,374,247

Total $ 53,919,391 2,225,006 56,144,397

As the State is legally obligated to fund TPAF on behalf of the University, the University’s proportionate

share of deferred outflows of resources and deferred inflows of resources are recognized by the State.

At June 30, 2018, $8,395,113 was reported as deferred outflows of resources related to pensions

resulting from contributions made on behalf of the University by the State subsequent to the

measurement date will be recognized as a reduction of the net pension liability in the year ended

June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of

resources related to pensions will be recognized in pension expense as follows:

PERS PFRS Total

Years ending:

2019 $ 4,317,554 244,764 4,562,318

2020 6,077,090 335,244 6,412,334

2021 4,365,071 88,514 4,453,585

2022 (2,794,481) (193,770) (2,988,251)

2023 (4,229,896) (133,420) (4,363,316)

$ 7,735,338 341,332 8,076,670

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June 30, 2018

33 (Continued)

Actuarial Assumptions

The total pension liabilities measured as of June 30, 2017 based on the July 1, 2016 actuarial

valuations for PERS, PFRS and TPAF were determined using the following actuarial assumptions:

PERS PFRS TPAF

Inflation rate 2.25% 2.25% 2.25%

Salary increases:

Through 2026 1.65 – 4.15% 2.10 – 8.98% Varies based on

based on age based on age experience

Thereafter 2.65 – 5.15% 3.10 – 9.98% Varies based on

based on age based on age experience

Investment rate of return 7.00% 7.00% 7.00%

2017

For PERS, pre-retirement mortality rates were based on the RP-2000 Employee Preretirement

Mortality Table for male and female active participants. For State employees, mortality tables are set

back 4 years for males and females. For local employees, mortality tables are set back 2 years for

males and 7 years for females. In addition, the tables provide for future improvements in mortality from

the base year of 2013 using a generational approach based on the plan actuary’s modified MP-2014

projection scale. Post-retirement mortality rates were based on the RP-2000 Combined Healthy Male

and Female Mortality Tables (set back 1 year for males and females) for service retirements and

beneficiaries of former members and a one-year static projection based on mortality improvement

Scale AA. In addition, the tables for service retirements and beneficiaries of former members provide

for future improvements in mortality from the base year of 2013 using a generational approach based

on the plan actuary’s modified MP-2014 projection scale. Disability retirement rates used to value

disabled retirees were based on the RP-2000 Disabled Mortality Table (set back 3 years for males and

set forward 1 year for females).

2017

For PFRS, pre-retirement mortality rates were based on the RP-2000 Pre-Retirement mortality tables

projected thirteen years using Projection Scale BB and then projected on a generational basis using

the plan actuary’s modified 2014 projection scales. Post-retirement mortality rates for male service

retirements and beneficiaries are based the RP-2000 Combined Healthy Mortality Tables projected

one year using Projection Scale AA and two years using the plan actuary’s modified 2014 projection

scales, which was further projected on a generational basis using the plan actuary’s modified 2014

projection scales. Post- retirement mortality rates for female service retirements and beneficiaries were

based the RP-2000 Combined Healthy Mortality Tables projected thirteen years using Projection Scale

BB and then two years using the plan actuary’s modified 2014 projection scales, which was further

projected on a generational basis using the plan actuary’s modified 2014 projection scales. Disability

mortality rates were based on special mortality tables used for the period after disability retirement.

ROWAN UNIVERSITY



June 30, 2018

34 (Continued)

2017

For TPAF, pre-retirement, post-retirement and disabled mortality rates were based on the experience

of TPAF members reflecting mortality improvement on a generational basis based on a 60-year

average of Social Security data from 1953 to 2013.

Long Term Expected Rate of Return

In accordance with State statute, the long-term expected rate of return on plan investments (7.00% and

7.65% at June 30, 2017 and 2016, respectively) is determined by the State Treasurer, after

consultation with the Directors of the Division of Investment and Division of Pensions and Benefits, the

board of trustees and the actuaries. The long-term expected rate of return was determined using a

building block method in which best-estimate ranges of expected future real rates of return (expected

returns, net of pension plan investment expense and inflation) are developed for each major asset

class. These ranges are combined to produce the long-term expected rate of return by weighting the

expected future real rates of return by the target asset allocation percentage and by adding expected

inflation.

Best estimates of the arithmetic real rates of return for each major asset class included in PERS’s,

PFRS’s and TPAF’s target asset allocations as of June 30, 2017 are summarized in the following table:

PERS PFRS TPAF

Long-term

expected

Target real rate

Asset class allocation of return

Absolute return/risk mitigation 5.00 % 5.51 %

Cash equivalents 5.50 1.00

U.S. Treasuries 3.00 1.87

Investment grade credit 10.00 3.78

Public high yield 2.50 6.82

Global diversified credit 5.00 7.10

Credit oriented hedge funds 1.00 6.60

Debt related private equity 2.00 10.63

Debt related real estate 1.00 6.61

Private real asset 2.50 11.83

Equity related real estate 6.25 9.23

U.S. equity 30.00 8.19

Non-U.S. developed markets equity 11.50 9.00

Emerging market equities 6.50 11.64

Buyouts/venture capital 8.25 13.08

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June 30, 2018

35 (Continued)

Discount Rate The discount rates used to measure the total pension liabilities were 5.00%, 6.14% and 4.25% for

PERS, PFRS, and TPAF, respectively, as of June 30, 2017. These single blended discount rates were

based on the long-term expected rate of return on pension plan investments of 7.00% and a municipal

bond rate of 3.58% as of June 30, 2017, based on the Bond Buyer GO 20-Bond Municipal Bond Index

which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or

higher.

The projection of cash flows used to determine the discount rate assumed that contributions from plan

members will be made at the current member contribution rates and that contributions from employers

will be made based on the contribution rate in the most recent fiscal year. The State employer

contributed 30% of the actuarially determined contributions for PERS, PFRS and TPAF and the local

employers contributed 100% of their actuarially determined contributions for PERS and PFRS. Based

on those assumptions, the plan’s fiduciary net position as of June 30, 2017 was projected to be

available to make projected future benefit payments of current plan members through 2040 for PERS,

2057 for PFRS and 2036 for TPAF. Therefore, the long-term expected rate of return on plan

investments was applied to projected benefit payments through 2040 for PERS, 2057 for PFRS and

2036 for TPAF and the municipal bond rate was applied to projected benefit payments after that date in

determining the total pension liability.

Sensitivity of the Collective Net Pension Liability to Changes in the Discount Rate

The following presents the collective net pension liability of the University as of June 30, 2017

calculated using the discount rates as disclosed above as well as the collective net pension liability if it

was calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than

the current rate:

At 1% At current At 1%

Plan (rates) decrease discount rate increase

PERS(4.00%, 5.00%, 6.00%) 343,561,501 295,481,815 255,547,006

PFRS(5.14%, 6.14%, 7.14%) 21,447,185 18,121,876 15,396,087

Change in Assumption

The discount rates used to measure the total pension liabilities were 3.98%, 5.55% and 3.22% for

PERS, PFRS, and TPAF, respectively, as of June 30, 2016. These single blended discount rates were

based on the long-term expected rate of return on pension plan investments of 7.65% and a municipal

bond rate of 2.85% as of June 30, 2016, based on the Bond Buyer GO 20-Bond Municipal Bond Index

which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or

higher.

ROWAN UNIVERSITY



June 30, 2018

36 (Continued)

(b) Defined Contribution Retirement Plans Alternative Benefit Program (ABP)

ABP provides retirement and death benefits for or on behalf of those full-time professional employees

and faculty members electing to participate in this optional retirement program. Participation eligibility

as well as contributory and noncontributory requirements is established by the State of New Jersey

Retirement and Social Security Law. Contributions can be invested with up to six investment carriers

available under the plan. Additional voluntary contributions may be made on a tax-deferred basis,

subject to limits within the Internal Revenue Code. The University assumes no liability for ABP

members other than payment of contributions.

Benefits are determined by the amount of individual accumulations and the retirement income option

selected. All benefits vest after the completion of one year of service. Individually owned annuity

contracts that provide for full ownership of retirement and survivor benefits are purchased at the time of

vesting. Participating University employees contribute 5% of salary and may contribute a voluntary

additional contribution up to the maximum Federal statutory limit, on a pre-tax basis. Employer

contributions are 8%. During the year ended June 30, 2018, ABP investment carriers received

employer and employee contributions as follows:

Employer contributions $ 10,799,217

Employee contributions 13,468,992

Basis for contributions:

Participating employee salaries $ 134,990,216

Employer contributions to ABP are paid by the State and are reflected in the accompanying financial

statements as State of New Jersey fringe benefit revenue and as expenses.

Effective July 1, 2010, Governor Christie signed Chapter 31, P.L. 2010 into law, which only allowed

employer contributions to ABP for salaries up to $141,000.

Defined Contribution Retirement Plan

DCRP was established under the provisions of Chapter 92, P.L. 2007 and expanded under the

provisions of Chapter 89, P.L. 2008 and Chapter 1, P.L. 2010. DCRP provides eligible members with a

tax-sheltered, defined contribution retirement benefit along with life insurance and disability coverage.

DCRP enrollment eligibility criteria includes employees who: (1) earn below a minimum base salary, or

(2) do not work a minimum number of hours per week, or (3) are enrolled in PERS and make in excess

of the established “maximum contribution” limits. Participating eligibility, as well as contributory and

noncontributory requirements, is established by the State of New Jersey Retirement and Social

Security Law.

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June 30, 2018

37 (Continued)

DCRP has one investment carrier, Prudential, which jointly administers the DCRP investments with the

Division of Pensions and Benefits. The University assumes no liability for DCRP members other than

payment of contributions. Benefits are determined by the amount of individual accumulations and the

retirement option selected. All benefits vest immediately for employees who are enrolled in PERS or

after one year for employees not in PERS. Individually owned annuity contracts that provide for full

ownership of retirement and survivor benefits are purchased at the time of vesting.

Participating University employees contribute 5.5% of their eligible wages. Employer contributions are

3%. During the year ended June 30, 2018, Prudential received employer and employee contributions

as follows:

Employer contributions $ 28,140

Employee contributions 51,589

Basis for contributions:

Participating employee salaries $ 937,978

(c) Post-Employment Benefits Other than Pensions The University’s retirees participate in the State Health Benefit State Retired Employees Plan (the

Plan).

Plan description, including benefits provided - The Plan is a single-employer defined benefit other

postemployment benefit (OPEB) plan, which provides medical, prescription drug, and Medicare Part B

reimbursements to retirees and their covered dependents. Although the Plan is a single-employer plan,

it is treated as a cost-sharing multiple employer plan for standalone reporting purposes. In accordance

N.J.S.A. 52:14-17.32, the State of New Jersey (the State) is required to pay the premiums and periodic

charges for OPEB of State employees who retire with 25 years or more of credited service, or on a

disability pension, from one or more of the following pension plans: the Public Employees’ Retirement

System (PERS), the Alternate Benefit Program (ABP) or the Police and Firemen’s Retirement System

(PFRS). In addition, Chapter 302, P.L. 1996 provides that for purposes of this Plan, the University’s

employees retain any and all rights to the health benefits in the Plan, even though the University is

considered autonomous from the State, therefore, its employees are classified as State employees. As

such, the State is legally obligated for the benefit payments on behalf of the retirees of the University;

therefore, the Plan meets the definition of a special funding situation as defined in GASB Statement

No. 75, Accounting and Financial Reporting for Other Postemployment Benefits Other Than Pensions

(GASB 75).

Retirees who are not eligible for employer-paid health coverage at retirement can continue in the

program by paying the cost of the insurance for themselves and their covered dependents. Pursuant to

Chapter 78, P.L, 2011, future retirees eligible for postretirement medical coverage, who have less than

20 years of creditable service on June 28, 2011, will be required to pay a percentage of the cost of their

healthcare coverage in retirement provided they retire with 25 years or more of pension service credit.

The percentage of the premium for which the retiree will be responsible for will be determined based on

the retiree’s annual retirement benefit and level of coverage.

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June 30, 2018

38 (Continued)

The Plan is administered on a pay-as-you-go-basis. Accordingly, no assets are accumulated in a

qualifying trust that meets the definition of a trust as per GASB 75.

Total OPEB Liability and OPEB expense

As of June 30, 2018, the State recorded a liability of $554,246,968 which represents the portion of the

State’s total proportionate share of the collective total OPEB liability that is associated with the

University (the University’s share). The University’s share was based on the ratio of its members to the

total members of the Plan. At June 30, 2018, the University’s share was 6.77% and 1.97% of the

special funding situation and of the Plan, respectively.

For the year ended June 30, 2018, the University recognized OPEB expense of $32,605,585. As the

State is legally obligated for benefit payments on behalf of the University, the University recognized

revenue related to the support provided by the State of $32,605,585.

Actuarial assumptions and other inputs – The State’s liability associated with the University at June 30,

2018 was determined by an actuarial valuation as of June 30, 2016, which was rolled forward to the

measurement date of June 30, 2017. This valuation used the following assumptions:

The discount rate is based on the Bond Buyer GO 20-Bond Municipal Bond Index, which includes tax-

exempt general obligation municipal bonds with an average rating of AA/Aa or higher. Salary increases

depend on the pension plan a member is enrolled in. In addition, they are based on age or years of

service.

Preretirement mortality rates were based on the RP-2014 Headcount-Weighted Healthy Employee

Male/Female mortality table with fully generational mortality improvement projections from the central

year using the MP-2017 scale. Postretirement mortality rates were based on the RP-2014 Headcount-

Weighted Healthy Annuitant Male/Female mortality table with fully generational improvement

projections from the central year using the MP-2017 scale. Disability mortality was based on the RP-

2014 Headcount-Weighted Disabled Male/Female mortality table with fully generational improvement

projections from the central year using the MP-2017 scale.

Certain actuarial assumptions used in the June 30, 2016 valuation were based on the results of

actuarial experience studies of the State of New Jersey’s defined benefit plans, including PERS (July 1,

2011 through June 30, 2014), ABP (using the experience of the Teacher’s Pension and Annuity Fund –

July 1, 2012 through June 30, 2015), and PFRS (July 1, 2010 through June 30, 2013).

Inflation 2.50%

Discount rate 3.58%

Salary increases

Through 2026 1.55 - 8.98%

Thereafter 2.00 - 9.98%

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June 30, 2018

39 (Continued)

Health Care Trend Assumptions - For pre-Medicare preferred provider organization (PPO) and health

maintenance organization (HMO) medical benefits, this amount initially is 5.9% and decreases to a

5.0% long-term trend rate after nine years. For self-insured post-65 PPO and HMO medical benefits,

the trend rate is 4.5%. For prescription drug benefits, the initial trend rate is 10.5% decreasing to a

5.0% long-term trend rate after eight years. For the Medicare Part B reimbursement, the trend rate is

5.0%. The Medicare Advantage trend rate is 4.5% and will continue in all future years.

(7) Accounts Payable and Accrued Expenses

The components of accounts payable and accrued expenses as of June 30, 2018 are as follows:

Vendors and other $ 19,971,756

Salaries and benefits 8,262,358

Due to State of New Jersey 4,067,049

Compensated absences – current portion 8,041,808

Accrued interest payable 8,265,867

Total accounts payable and accrued expenses $ 48,608,838

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June 30, 2018

40 (Continued)

(8) Long-term Debt

(a) Bonds Payable Capital assets are financed through revenue bonds of the New Jersey Educational Facilities Authority

(NJEFA), the Camden County Improvement Authority (CCIA) and the Gloucester County Improvement

Authority (GCIA). The following obligations were outstanding as of June 30, 2018:

Interest rate 2018

NJEFA Series 2007 B Revenue Refunding Bonds, due

serially to 2034 3.000%–5.500% $ 4,125,000

CCIA Series 2010 A Build America Bonds, due serially

to 2035 5.055%–7.847% 90,590,000

NJEFA Series 2011 C Revenue Refunding Bonds, due

serially to 2025 3.000%–5.000% 17,580,000

CCIA Series 2013 A Rowan SOM Revenue Refunding

Bonds, due serially to 2032 3.000%–5.000% 23,905,000

CCIA Series 2013 B Rowan SOM Revenue Refunding

Bonds due serially to 2032 0.890%–5.160% 22,235,000

GCIA Series 2015 A Revenue Bonds, due serially to 2036 3.250%–5.000% 34,745,000

GCIA Series 2015 B Revenue Refunding Bonds, due

serially to 2031 1.500%–5.000% 64,455,000

GCIA Series 2015 C Revenue Bonds, due serially to 2044 4.000%–5.000% 51,550,000

NJEFA Series 2016 C Revenue Refunding, due serially

to 2031 2.500%–5.000% 44,735,000

GCIA Series 2017 A Revenue Bonds, due serially to 2033 3.000%–5.000% 73,475,000

GCIA Series 2017 B Revenue Bonds, due serially to 2019 1.850%–2.100% 4,155,000

431,550,000

Plus:

Bond premium 32,730,177

Total bonds payable $ 464,280,177

ROWAN UNIVERSITY



June 30, 2018

41 (Continued)

Future annual debt service requirements approximate the following:

Principal Interest Total

amount amount amount

Year ending June 30:

2019 $ 22,890,000 21,317,235 44,207,235

2020 18,175,000 20,467,413 38,642,413

2021 20,085,000 19,476,874 39,561,874

2022 23,665,000 18,327,334 41,992,334

2023 21,395,000 17,207,959 38,602,959

2024-2028 126,125,000 66,878,959 193,003,959

2029-2033 104,675,000 36,057,575 140,732,575

2034-2038 48,575,000 14,425,908 63,000,908

2039-2043 31,470,000 6,239,750 37,709,750

2044-2048 14,495,000 371,250 14,866,250

$ 431,550,000 220,770,257 652,320,257

In July 2016, the NJEFA issued Rowan University Series 2016 C Bonds. The 2016 C revenue

refunding bonds totaled $45,300,000 with coupon rates ranging from 2.500% to 5.000% and maturing

through 2031. The proceeds from this bond issuance will be used, along with other available funds, to

refund and redeem all of NJEFA’s Rowan University Series 2006 G Bonds, defease and redeem all of

NJEFA’s callable Rowan University 2008 B Bonds and pay the costs and expenses incurred in the

issuance of the 2016 C Bonds. On a net present value basis, savings were $6,962,589 or 13.21% of

the par amount of bonds refunded. The refunding resulted in gross debt service cash-flow savings of

$9,834,067.

In August 2015, the GCIA issued Series 2015 C Bonds. The 2015 C bonds totaled $51,550,000 with

coupon rates ranging from 4.000% to 5.000% and maturing through 2044. The proceeds from this bond

issuance will be used, along with other available University funds, to finance business and engineering

school building projects, fund capitalized interest on the 2015 C issue through July 1, 2017 and pay the

costs of issuance.

Funds are on deposit with escrow agents to provide for the payment of principal, interest, and call

premiums, when due, on Series 2007 B, Series 2008 B and Series 2009 B Bonds. Accordingly, these

bonds are legally outstanding obligations of the University as of June 30, 2018, however are defeased

for financial reporting, therefore, they are not reflected in the accompanying financial statements. The

principal amounts of these bonds were $62,533,150 as of June 30, 2018.

ROWAN UNIVERSITY



June 30, 2018

42 (Continued)

In July 2017, the Gloucester County Improvement Authority (GCIA) issued Rowan University

Series 2017A and 2017B Bonds. The 2017A tax exempt revenue refunding bonds totaled $73,475,000

with coupon rates ranging from 3.000% to 5.000% and maturing through 2033. The 2017B taxable

revenue refunding bonds totaled $4,155,000 with coupon rates ranging from 1.850% to 2.100% and

maturing through 2019. The proceeds from these bond issuance were used to refund and redeem all of

NJEFA’s Rowan University Series 2007B Bonds and pay the costs and expenses incurred in the

issuance of the 2017A and 2017B Bonds.

(b) Capital Lease Obligation In 2008, the University entered into a lease agreement with SORA Housing LLC (SORA). SORA

constructed two four story student housing facilities with a total of 242 units, consisting of 884 total

beds, on a leasehold interest in land that was conveyed to SORA by the Borough of Glassboro. SORA

agreed to lease the land, the facilities and the facilities equipment together with the fixtures,

improvements and equipment to the University. Rental payments are due in semiannual installments

on September 1 and February 1, each year. The University has a capital lease payable as of June 30,

2018 in the amount of $72,010,025.

In 2008, the University entered into a lease agreement with SORA RETAIL LLC (SORA). SORA

constructed an approximately thirty six thousand square foot two story building for use as a university

bookstore and other uses compatible with a university bookstore. The bookstore, which also contains a

coffee shop, is being sub-leased to Barnes & Noble College Booksellers, Inc. Rental payments are due

in monthly installments. The University has a capital lease payable as of June 30, 2018 in the amount

of $11,762,987.

In 2011, the University entered into a lease agreement with SORA A-1 Housing Urban Renewal Entity,

LLC (SORA). SORA constructed a mixed-use building on land it owns in Glassboro, New Jersey. The

building consists of a five-story, mid-rise apartment building with ground floor retail. Within this building,

on the second through fifth floor, SORA constructed apartment units, classrooms, offices and other

administrative spaces. The administrative space, in addition to classrooms and offices, includes

lounges, study rooms, recreational rooms together with all common elements, including elevators,

laundry facilities, recreational and fitness facilities and other amenities. The University’s lease pertains

to the apartment units and administrative areas only. The apartment units are being occupied by

University honor students and consist of 280 beds. Rental payments are due in semi-annual

installments on September 1 and February 1, each year. The University has a capital lease payable as

of June 30, 2018 in the amount of $34,234,100.

In 2012, the University entered into a Master Lease Agreement to restructure the three leases above

into a single lease. The Master Lease will be for a thirty-year term through 2042. The University has the

option to purchase all, but not less than all, of the Premises at any time during the Term of the Lease in

accordance with terms listed in the Agreement. If no election to purchase the Premises occurs during

the term, upon the payment in full of all rent and other charges due under the Lease, the Premises

shall be conveyed to the University at the conclusion of the term without additional consideration. The

University received a landlord contribution of $8,150,000 to help defray the costs of implementation of

the property to its intended use.

ROWAN UNIVERSITY



June 30, 2018

43 (Continued)

In April 2012, the University entered into a lease agreement with Nexus Holdings, LLC (Nexus). Nexus

constructed a multi-level parking garage consisting of approximately 1,200 parking spaces. The

construction started in July 2012 and was completed for the Fall 2013 semester. The University’s lease

pertains to the use of 900 parking spaces as well as the use of all common areas of the parking

garage. The term of the lease shall be for a period of thirty years and started on the date when the

facility became ready for occupancy. At the completion of the lease term, the University will have the

option of extending the lease for an additional four terms of ten years each. The University will have the

option to purchase 900 spaces in the garage at fair market value at any time within the first five years

after the expiration of the initial term of the lease. The University has a capital lease payable as of

June 30, 2018 in the amount of $21,496,019.

In April 2012, the University entered into a second lease agreement with Nexus to construct a five-story

retail, classroom and office building. The construction started in July 2012 and was completed for the

Fall 2013 semester. The University’s lease pertains to the second through fifth floors, which will contain

classrooms and office space, as well as the central lobby of the building and the lobby and stairwells

connecting the building to an adjacent parking garage. The first floor of the building will be for retail

operations. The term of the lease will be for a period of twenty years and started on the date when the

facility became ready for occupancy. The University will have the option to purchase the leased portion

of the property, at the end of the term, for $1.00 consideration. The University has a capital lease

payable as of June 30, 2018 in the amount of $15,043,597.

Future minimum lease payments under the capital leases are as follows:




2019 $ (611,006) 14,707,956 14,096,950

2020 (359,977) 14,762,768 14,402,791

2021 (125,746) 14,795,419 14,669,673

2022 157,100 14,805,217 14,962,317

2023 484,670 14,787,565 15,272,235

2024-2028 9,322,728 72,324,215 81,646,943

2029-2033 27,017,205 64,669,259 91,686,464

2034-2038 47,833,770 47,958,948 95,792,718

2039-2043 70,425,413 16,662,741 87,088,154

2044-2046 402,571 4,945 407,516

$ 154,546,728 275,479,033 430,025,761

(c) Other Long-Term Debt Other long-term debt consists of the following:

(A) The Higher Educational Capital Improvement Fund Act was established to finance capital

improvements and related costs at public and private institutions of higher education within the

ROWAN UNIVERSITY



June 30, 2018

44 (Continued)

State. Funding was provided from bonds issued by the New Jersey Educational Facilities Authority

(Authority). The total University allocation for this program was $23,887,250. The University is

required to pay 1/3 of the debt service on its allocation of the bond proceeds, plus administrative

fees of the trustees and the Authority. The outstanding balance as of June 30, 2018 is $3,557,535

with maturities through August 15, 2022.

(B) As a result of the New Jersey Medical and Health Sciences Education Restructuring Act, Higher

Educational Capital Improvement Fund Act outstanding debt of UMDNJ, related to SOM, was

transferred to the University on July 1, 2013. The outstanding balance on this debt, as of June 30,

2018 is $1,010,908.

(C) In July 2013, the University received notification of an institutional grant award from the New Jersey

Higher Education Capital Facilities Grant Program. The University was awarded $26.6 million from

the Higher Educational Capital Improvement Fund Act. The University is required to pay 1/3 of the

debt service on its allocation of the bond proceeds plus administrative fees of the Trustees and the

Authority. The outstanding balance as of June 30, 2018 is $7,377,756, with maturities through

August 15, 2033.

(D) In July 2013, the University received notification of an institutional grant award from the New Jersey

Higher Education Capital Facilities Grant Program. The University was awarded $0.75 million from

the Higher Education Equipment Leasing Fund. The University is required to pay 1/4 of the debt

service on its allocation of the bond proceeds plus administrative fees of the Trustees and the

Authority. The outstanding balance as of June 30, 2018 is $101,009.

(E) In July 2016, the University was notified by the State that it was awarded a $16 million dollar grant

under the Higher Education Capital Improvement Fund Act. Funding was provided from bonds

issued by the New Jersey Educational Facilities Authority. The grant is to be used to fund two

projects: (1) Facilities Adaptive Reuse Program for Academic Space Expansions and (2) Joint

Health Sciences Center Expansion. The University is required to pay 1/3 of the debt service on its

allocation of the bond proceeds. The outstanding balance as of June 30, 2018 is $5,103,455, with

maturities through August 15, 2036.

(F) In August 2017, the University entered into a loan with NEXUS Properties in the amount of

$2,693,846 with an interest rate of 4.88% for a term of 15 years. The loan is for the fit-out of the

classroom portion of the A-3 building situated at Victoria Street and Mick Drive in the Borough of

Glassboro. The outstanding balance as of June 30, 2018 $2,579,510 with principal and interest due

monthly.

ROWAN UNIVERSITY



June 30, 2018

45 (Continued)

Principal and interest payments for these obligations are as follows:




2019 $ 1,487,273 824,205 2,311,478

2020 1,542,106 772,783 2,314,889

2021 1,596,142 715,831 2,311,973

2022 1,677,636 654,329 2,331,965

2023 1,745,961 588,122 2,334,083

2024-2028 4,308,393 2,273,519 6,581,912

2029-2033 5,177,161 1,181,384 6,358,545

2034-2038 2,195,501 173,806 2,369,307

$ 19,730,173 7,183,979 26,914,152

(9) Noncurrent Liabilities

Noncurrent liabilities activity for the year ended June 30, 2018 was as follows:

Beginning Ending Current

balance Additions Reductions balance portion

Compensated absences $ 10,440,957 8,120,972 8,166,557 10,395,372 8,041,808

Unearned revenue 35,080,792 19,964,776 23,094,776 31,950,792 22,799,693

Other liabilities 658,556 2,003,169 — 2,661,725 —

Repurchase liability 3,220,000 — — 3,220,000 —

Deposits held in custody for

others 1,685,482 3,022,301 2,573,355 2,134,428 —

Net pension liability 355,619,853 22,616,860 64,633,022 313,603,691 —

Bonds payable 481,194,304 91,297,549 108,211,676 464,280,177 22,890,000

Other long-term debt 18,379,099 2,579,511 1,228,437 19,730,173 1,487,273

Capital lease obligation 153,646,921 — (899,807) 154,546,728 (611,006)

Total noncurrent

liabilities $ 1,059,925,964 149,605,138 207,008,016 1,002,523,086 54,607,768

(10) Professional Services and Contract Revenues

The SOM Faculty Practice Plan revenues primarily consist of fee for service payments, inclusive of quality

incentives and capitation payment, from the Centers for Medicare & Medicaid Services (CMS) and other

third party insurance providers for inpatient and outpatient services provided by the SOM faculty. In

addition, significant contract payments for medical directorships and other contracted service agreements,

such as behavioral health and hospitalist services, account for approximately one-third of the revenues.

ROWAN UNIVERSITY



June 30, 2018

46 (Continued)

The components of professional services and contract revenues for the year ended June 30, 2018 are as

follows:

Faculty practice revenues:

Gross charges $ 57,107,819

Contractual and other allowances (25,403,863)

Provision for bad debts (1,094,471)

Bad debt recovery 212,141

Total faculty practice 30,821,626

House staff and affiliation revenues:

House staff billings 20,674,083

Affiliation billings 2,598,241

Total house staff and affiliation 23,272,324

Total professional services and contract revenue $ 54,093,950

Gross charges pertain to the following payers:

Medicare 35 %

Medicaid and Medicaid HMO 18

Contracts 16

Other third party payors 29

Uninsured, charity care and self pays 2

100 %

Faculty practice gross accounts receivable pertain to the following payers:

Medicare 38 %

Medicaid and Medicaid HMO 18

Contracts 33

Other third party payors 10

Self pays 1

100 %

ROWAN UNIVERSITY



June 30, 2018

47 (Continued)

(11) Commitments and Contingencies

(a) Operating Leases The University leases certain space and equipment used in general operations. Rental expense was

approximately $2,947,000 during fiscal year 2018. Future minimum annual rental commitments

approximate the following:

Amount


2019 $ 2,398,769

2020 2,071,358

2021 1,961,776

2022 1,942,981

2023 1,957,482

2024 and thereafter 15,634,513

$ 25,966,879

(b) Compensated Absences The University recorded a liability for accumulated vacation time in the amount of approximately

$8,042,000 as of June 30, 2018, which is included in accounts payable and accrued expenses in the

accompanying statements of net position. The liability is calculated based upon employees’ accrued

vacation leave as of the statements of net position date.

Payments for accumulated sick leave balances are made to retiring employees upon regular

retirement. The payment is based on 50% of the employee’s sick leave accumulation, at the pay rate in

effect at the time of retirement up to a maximum of $15,000. Employees separating from University

service prior to retirement are not entitled to payments for accumulated sick leave balances.

Accordingly, the University recorded a liability for accumulated sick leave balances in the amount of

approximately $1,950,000 as of June 30, 2018, which is included in compensated absences in the

accompanying statements of net position.

During fiscal year 2010, bargaining unit employees were required to take seven unpaid furlough days.

Three of these days were banked for either future use or pay out upon separation. A liability for the

accumulated leave bank in the amount of approximately $403,000 as of June 30, 2018, is recorded in

compensated absences in the accompanying statements of net position.

(c) Risk Management The University is exposed to various risks of loss. As an instrumentality of the State of New Jersey, the

liability of the University is subject to all of the provisions of the New Jersey Tort Claims Act (N.J.S.A.

59:1 1 et seq.), the New Jersey Contractual Liability Act (N.J.S.A. 59:13 1 et seq.), and the availability

of appropriations. The Tort Claims Act also creates a Tort Claims Fund and provides for payment of

eligible claims filed against the University or against its employees, whom the State is obligated to

indemnify against tort claims which arise out of the performance of their duties. Therefore, the

ROWAN UNIVERSITY



June 30, 2018

48 (Continued)

University’s liability and employee benefit exposures are self-funded programs maintained and

administered by the State (including tort liability, employment liability, medical professional liability, auto

liability, trustee’s and officer’s liability, workers’ compensation, unemployment, temporary and long-term

disability, unemployment liability, life insurance and employee retirement programs). An annual

appropriation is provided by the legislature for all statutory self-funded programs.

The University purchases and maintains a commercial property insurance policy through a joint

insurance program with the New Jersey Association of State Colleges and Universities (NJASCU a/k/a

the Consortium). University buildings, contents, plant operations, boiler & machinery, business

interruption, and lost revenue are insured on an all risk replacement cost basis with a per occurrence

limit of $2.0 billion, subject to a $100,000 per occurrence deductible. A $500,000 combined per

occurrence deductible applies to five University buildings due to flood exposure; the University’s per

occurrence policy deductible is capped at the $500,000.

In addition to the property insurance policy maintained through the consortium, the University maintains

several policies of insurance to ensure a comprehensive approach to managing the risk of loss from

exposures that are or may be ineligible for Tort Claims Protection. The following policies are

maintained and these policies also extend coverage to the University’s separately incorporated

501 (c) (3) auxiliary organizations: Crime insurance policy (moneys and securities coverage) in the

amount of $2,000,000 with a per loss deductible of $25,000; Information Security & Privacy Liability in

the amount of $10,000,000 with a per loss deductible of $100,000; and Pollution Legal Liability in the

amount of $10,000,000 with a per loss deductible of $100,000. The University also maintains a Student

Professional Liability policy in the amount of $1,000,000 per occurrence with a $3,000,000 annual

aggregate and a per loss deductible of $10,000 to cover students participating in professional

internships (excludes medical students since they are provided protection through the Tort Claims Act).

The following policies of insurance are maintained for the University’s separately incorporated 501

(c)(3) auxiliary organizations (New Jersey Statutes Title 18A Education provides each auxiliary

organization with the power to “sue and be sued” (N.J.S.A. 18A:64 30) and directs them to procure

their own legal representation because they will not be represented by the State of New Jersey Office

of Attorney General (N.J.S.A. 18A:64 35), thereby exempting them from protection under the New

Jersey Tort Claims Act): Director’s and Officer’s Liability in the amount of $5,000,000 with a per

occurrence deductible of $25,000; General Liability in the amount of $1,000,000 per occurrence with a

$3,000,000 annual aggregate and a per occurrence deductible of $75,000, which also extends

coverage to Rowan student educational programs and activities; and excess liability in the amount of

$20,000,000 which responds above the General Liability policy, and the University’s Student

Professional Liability policy referenced above, and also provides difference in conditions coverage to

the University to cover any gaps in Tort Claims liability protection.

All commercial insurance policies are renewed on an annual basis. There has been no decrease in

insurance coverage during the current year. There have been no settlements in excess of insurance

coverage in the past three years.

ROWAN UNIVERSITY



June 30, 2018

49 (Continued)

(d) Medical Malpractice Self-Insurance Fund The University participates in a fund administered by the State known as the Medical Malpractice

Self-Insurance Fund (the Fund), which is used to pay malpractice claims and related insurance

premiums. The University and the State approve the payment of claims and the University is required

to make contributions to the Fund from the SOM Faculty Practice Plan and the Graduate Medical

Education (GME) programs. Monies in the Fund, commercial excess liability insurance coverage, and

coverage provided by the New Jersey Tort Claims Act are used to meet the cost of claims against

SOM. The State has the ultimate liability for any claims in excess of the Fund’s assets.

Payment of claims (indemnity and expenses) from the Fund totaled $1,633,542 in fiscal year 2018 for

SOM. Included in accounts payable and accrued expenses is approximately $3,250,000 as of June 30,

2018, which represents the University’s contribution to the Fund for the same years ended.

(e) Voluntary Compliance Plan UMDNJ had operated under a five year Corporate Integrity Agreement (CIA) with the Department of

Health and Human Services Offices of the Inspector General (DHHS OIG) since September 2009. This

agreement was assignable to successor organizations. Upon the integration of SOM into Rowan

University, the Board of Trustees of Rowan University adopted a healthcare compliance program

consistent with relevant laws and practices, and to fulfill the requirements of the CIA and the 15

remaining months of the agreement. The CIA requirements expired September 2014, but the

compliance measures that have been developed and implemented will be continued. A Voluntary

Compliance Program was implemented on September 26, 2014 and remains in place.

(f) Other Contingencies The University is involved in several claims and lawsuits incidental to its operations. In the opinion of

management, the ultimate resolution of these matters will not have a material adverse effect on the

financial position of the University.

(g) Service Concession Arrangement for the Student Housing Facility (i) Ground Lease

On April 30, 2015, the University entered into a ground lease with Provident Group – Rowan

Properties LLC (Provident) to develop, construct and operate a student housing facility

(the Project), consisting of an approximately 1,415 bed student housing facility including a shell for

a residential dining facility, with all buildings, improvements, fixtures, furnishing, equipment and

amenities necessary for the operation thereof on certain real property located on the campus

(the Land), along with associated site infrastructure and various related amenities, utilities and

improvements within and outside the Land. The term of the ground lease is 37 years and

commenced on April 30, 2015 with no option to renew or extend by Provident. Upon termination of

the ground lease, all rights, title and interest to the Project shall automatically and immediately vest

in the University. The base annual rent is equal to the net surplus cash flow for the immediately

preceding period.

ROWAN UNIVERSITY



June 30, 2018

50 (Continued)

In connection with the ground lease, the New Jersey Economic Development Authority issued

Revenue Bonds (the Bonds) and lent the proceeds to Provident in order to fulfill their obligations

under the ground lease. The University has no obligation to pay debt service on the Bonds.

During the term of the ground lease, Provident shall use and operate the Land for the sole and

exclusive purpose of developing and constructing the Project, operating the Project as a student

housing facility only for residents, with a sublease of the Dining Facility with the University under

the Dining Facility Sublease for use by the residents, the University, students and staff of the

University and their visitors and authorized representatives. The University will act as an agent for

Provident, entering into Residence License Agreements with students to reside in the student

housing facility, collecting all amounts due and remitting them to the Bond Trustee and enforcing

compliance with the Residence License Agreements in accordance with the management

agreement. Under the terms of the Bond Trustee Indenture, the Bond Trustee will accumulate

these fees to pay the annual debt service of Provident and reimburse the operating expenses of

the student housing facilities on a monthly basis.

(ii) Project Development Agreement

On April 30, 2015 (the Effective Date), University Student Living, LLC (the Developer) and

Provident entered into a project development agreement to design and construct the student

housing facility, as defined as the Project, for the benefit of and furtherance of the educational

mission of Rowan University. The term of the agreement begins with the Effective Date and will

terminate upon Developer’s fulfillment of the services and obligations under the agreement, which

was deemed substantially complete as of July 22, 2016. The agreement is subject to a guaranteed

maximum price for development costs of $92.0 million, subject to approved change orders. If the

development costs of the final completed project exceed the guaranteed maximum price, the

Developer is solely responsible for and will pay any excess costs from its own funds. All fees due to

the Developer are the responsibility of Provident. Per the agreement the University was entitled to

reimbursement of pre-development costs in connection with the Project up to $0.5 million during

fiscal year 2016.

(iii) Management Agreement

On April 30, 2015, the University entered into a management agreement with Provident and

University Student Living Management, LLC (the Manager) (collectively, the Management

Agreement) to engage the Manager to manage, operate and maintain the student housing facility.

The term of the Management Agreement is five years with extensions for two successive five year

periods commencing with the expiration of the original five year engagement, unless either party

provides notice of nonextension at least 120 days prior to such expiration. The original five year

engagement began after the date of substantial completion of the student housing facility in which

revenues are deposited to the Bond Trustee.

All fees due to the Manager are the responsibility of Provident. The University is responsible for the

billing and collection of student housing fees, deposits, charges and other amounts under

residence license agreements and remitting the funds to the Bond Trustee. The University will

provide resident life services and staffing; marketing of the student housing facility; and cable,

ROWAN UNIVERSITY



June 30, 2018

51 (Continued)

telephone and internet services, all of which will be reimbursed as operating expenses of the

Project.

(iv) Dining Facility Sublease

On April 30, 2015, the University entered into a Dining Facility Sublease with Provident for the

operation and management of a dining facility that was constructed under the project development

agreement. The term began on the date that the Project is substantially completed and the

University accepts possession of the dining facility. The end of the lease is concurrent with the

ground lease with automatic renewal to the extent that the ground lease is extended or renewed.

The base annual rent is $1.00.

(v) Recognition

During fiscal year 2017, the construction of the student housing facility was completed and the new

facility – Holly Pointe Commons– was placed into service. Under the ground lease service

concession arrangement, the University recognized $114.8 million in net capital assets as well as

net deferred inflows of resources. Additionally, the University recognized $6.1 million in net capital

assets and net deferred inflows of resources related to the dining facility sublease, as well as

$2.3 million of operating auxiliary enterprises revenue as outlined in the Management Agreement.

(vi) Nature and Extent of Rights

During the term of the ground lease, Provident shall use and operate the Property for the sole and

exclusive purpose of developing and constructing the Project, operating the Project as a student

housing facility only for residents, with a sublease of the Dining Facility with the University under

the Dining Facility Sublease for use by the residents, the University, students and staff of the

University and their visitors and authorized representatives. The building shall be named as

determined by the University in its sole and absolute discretion. The Manager shall manage,

operate, and maintain the Student Housing Facility, with the advice and consultation of a project

operations committee established by Provident under the Operating Agreement, pursuant to the

Ground Lease, which shall at all times be composed of five (5) members, three (3) of whom shall

be appointed by the University, one (1) of whom shall be appointed by the Manager, one (1) of

whom shall be appointed by Provident. Under the ground lease, the University also have the right

and option at any time after ten (10) years either (a) to purchase Provident’s right, title, and interest

in and to the Property, or (b) to terminate the Ground Lease, or (c) to acquire all the rights, titles

and interests of Provident under the Loan Agreement and the other Bond Documents and any and

all disbursements to be made. Upon the termination or expiration of the Ground Lease from any

cause, all rights and interests of Provident shall immediately cease and terminate, and all of the

Project and Property, including all buildings, structures, improvements, equipment, engines,

machinery, dynamos, generators, boilers, furnaces, elevators, fire escapes, and all lifting, lighting,

heating, cooling, refrigerating, air conditioning, ventilating, gas, electric and plumbing apparatus,

appliances and fixtures, as well as other fixtures attached to or within the Property, and all

personality and any other personal property located thereon, shall thence forward constitute and

belong to and be the absolute property of the University or the University’s successors and

assigns.

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June 30, 2018

52 (Continued)

(h) Camden Housing Project In April 2014, the University entered into an agreement regarding Development of Housing and Related

Guaranty of Rental Payment with Broadway Housing Partners LLC (the Developer) to purchase and

redevelop the properties in the immediate vicinity of the Cooper Medical School of Rowan University.

These properties contain approximately fifty-six residential rental units, which the Developer intends to

lease to University students as fair market rental housing, and, with regard to any units that are not

leased to University students, to any other qualified renters, so as to maximize occupancy of the units

in the project. As the University directly benefits from the redevelopment of the properties, the

University warrants to pay the Developer on an annual basis the difference between ninety-five percent

of aggregate standard rent and the aggregate rent collected. There is no cap of these shortfall

payments during the initial term (years 1–10). During the second term (years 11–20), as the rent

increases, in year 11 the shortfall payment shall not exceed $300,000; and in each calendar year

thereafter the cap shall be increased by a percentage equal to the percentage increase in the CPI

index. The University’s shortfall payments will not exceed the aggregate amount of $2,500,000 over the

course of the second term. The University shall have no obligation to pay any amounts to the

Developer for the periods after the expiration of the second term. The first rental year began on

August 1, 2015. The University made $544,295 shortfall payments during fiscal year 2018.

(i) Inspira Health Network The University entered into a Purchase and Sale Agreement with Inspira Health Network (Inspira) for

certain property owned by the University for $11.5 million during fiscal year 2016. In conjunction with

the transaction, the University and Inspira also entered into a Repurchase and Right of First Refusal

Agreement, whereas the University has the option to repurchase the property if Inspira has not

commenced efforts to develop the land by the fourth anniversary of the closing and further, the

University has the option to repurchase undeveloped portions of the property after 20 years from the

date of the closing. On May 24, 2017, Inspira broke ground on the medical center project planned for

the 100-acre parcel property purchased from the University. The first phase of the medical center is

expected be approximately 467,000 square feet which will allow for additional development over time.

The portion of the property currently under construction represents approximately 72% of the overall

property cost. As a result, the University recognized the partial land sale of $8,280,000, a gain of

$830,817, as well as $900,000 in contribution revenue for the appraised market value of the donated

land from Harrison Township and reduced the original repurchase liability from $12,400,000 as of June

30, 2016 to $3,220,000 as of June 30, 2017. As of June 30, 2018, the University has a repurchase

liability of $3,220,000.

(12) Rowan University Foundation

(a) Component Unit Rowan University Foundation (the Foundation) is a legally separate, tax exempt component unit of the

University with a fiscal year end of June 30. The Foundation has received a determination letter from

the Internal Revenue Service concluding that it is exempt from Federal income taxes under

Section 501(c)(3) of the Internal Revenue Code. The Foundation acts primarily as a fundraising entity

to supplement the resources that are available to the University in support of its programs. Although the

University does not control the timing or amount of receipts from the Foundation, the Foundation’s

assets are used exclusively for the benefit, support, and promotion of the University and its educational

ROWAN UNIVERSITY



June 30, 2018

53 (Continued)

activities. Because these resources held by the Foundation can only be used by, or are for the benefit

of the University, the Foundation is considered a component unit of the University and is discretely

presented as part of the University’s financial statements. The University provides accounting,

accounts payable, and payroll services for the Foundation.

On August 14, 2014, the Rowan Innovation Venture Fund (the Fund) was formed as a legally separate,

single member limited liability corporation whose sole member is the Foundation. The Fund is

managed by or under the direction of the Fund’s Board of Managers as appointed by the Foundation.

Further, the Foundation is able to impose its will on the Fund by influencing its activities and is legally

entitled to or can otherwise access the Fund’s resources. Because the Foundation is financially

accountable for the Fund, the Fund is considered a component unit of the Foundation. The primary

purpose of the Fund is establishing, developing, owning, managing, operating and administering a

seed and early stage venture capital fund to support and leverage the innovation talents and ideas of

the members of the Rowan University community and to accelerate the impact of the University on the

economic development of Southern New Jersey. As the Fund is organized as a not-for-profit

corporation for which the Foundation is the sole member, its activities are blended into the totals of the

Foundation. The Fund is treated as a disregarded entity by the Foundation under Treasury Regulations

Sections 301.7701-1 through 301.7701-3 as it is a limited liability corporation with a single owner.

Accordingly, the Fund is recognized as a tax exempt entity as described in Section 501(c)(3).

During the year ended June 30, 2018 the University received $11,061,684 from the Foundation.

Complete financial statements of the Foundation can be obtained from the Office of the Chief Financial

Officer, Rowan University, Glassboro, New Jersey.

(b) Cash, Cash Equivalents, Restricted Nonexpendable Investments and Investments As of June 30, 2018, the Foundation’s cash, cash equivalents and investments are reported on the

statements of net position as follows:

Cash and cash equivalents $ 8,707,774

Restricted cash and cash equivalents 3,897,815

$ 12,605,589

Investments $ 50,191,293

Restricted investments 22,466,864

Restricted nonexpendable investments 143,283,589

$ 215,941,746

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June 30, 2018

54 (Continued)

Cash, cash equivalents, restricted nonexpendable investments and investments consist of the following

as of June 30, 2018:

Cash and cash equivalents:

Cash $ 3,480,896

Money market funds 9,124,693

$ 12,605,589

Investments:

Bond mutual funds (domestic) $ 22,256,803

Common stock mutual funds (domestic) 85,676,939

Common stock mutual funds (international) 42,892,144

Venture capital investments 1,876,950

Alternative investments 63,238,910

$ 215,941,746

For the year ended June 30, 2018, the increase in fair value on investments was $10,640,563 and the

net realized gain on investments for June 30, 2018 was $6,360,481. The calculation of realized gains

and losses is independent of a calculation of the net change in the fair value of investments. Realized

gains and losses on investments that had been held in more than one fiscal year and sold in the

current year were included as a change in the fair value of investments reported in the prior year and

the current year.

The Foundation has an investment policy, which establishes guidelines for permissible investments.

The Foundation may invest in domestic equity securities, international equity securities, fixed income

securities, real estate investments and venture capital investments. The Foundation’s cash and cash

equivalents and investments are subject to various risks. Among these risks are custodial credit risk,

credit risk and interest rate risk. Each one of these risks is discussed below.

Custodial credit risk is the risk that in the event of a bank failure, the Foundation’s deposits may not be

returned to it. Cash and money market accounts were held at a depository and bank balances

amounted to $12,615,771 as of June 30, 2018. Of this amount, $250,000 was FDIC insured, leaving an

uninsured and uncollateralized balance of $12,239,911.

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.

The credit risk of a debt instrument is measured by nationally recognized statistical rating agencies

such as Standard and Poors (S&P) and Moody’s. The Foundation’s investment policy requires fixed

income securities to replicate the Barclays Capital Aggregate characteristics with regard to maturity,

structure, duration, credit quality, sector distribution, etc. As of June 30, 2018, the bond mutual funds

(domestic) were unrated.

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of a debt

investment. The Foundation’s investment policy does not specifically address limitations in the

maturities of investments.

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June 30, 2018

55 (Continued)

The Foundation’s investments’ average effective duration for June 30, 2018 are as follows:

Average

Fair effective

Investment type value duration

Bond mutual funds (domestic) $ 6,894,043 5.67 years

Bond mutual funds (domestic) 4,446,773 6.13 years

Bond mutual funds (domestic) 6,870,963 6.05 years

Bond mutual funds (domestic) 155,933 6.03 years

Bond mutual funds (domestic) 3,889,091 -1.14 years

Total $ 22,256,803

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in

an orderly transaction between market participants at the financial statement measurement date. The

fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into

three levels as follows:

• Level 1 – unadjusted quoted or published prices for identical assets or liabilities in active markets

that a government can access at the measurement date.

• Level 2 – quoted prices other than those included within Level 1 and other inputs that are

observable for an asset or liability, either directly or indirectly.

• Level 3 – pricing inputs are unobservable for the asset or liability and include situations where there

is little, if any, market activity or the investment.

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3.

When the fair value of an asset or a liability is measured using inputs from more than one level of the

fair value hierarchy, the measurement is considered to be based on the lowest priority level that is

significant to the entire measurement.

The following is a description of the valuation methodologies used for instruments measured at fair

value:

• Bond and common stock mutual funds – The fair value of bond and common stock mutual funds

are based on quotations obtained from national securities exchanges or the published price as of

the measurement date.

• Venture capital investments – The fair value of the venture capital investments is based off of the

initial cost of investments that are entered into during the current fiscal year and cost was

determined to approximate fair value. Venture capital investments made in prior years are analyzed

to determine if any adjustments to the cost basis of such investments is necessary.

ROWAN UNIVERSITY



June 30, 2018

56 (Continued)

• Alternative investments (including absolute return, private equity and realty investments) – The fair

value is based off of the net asset value (NAV), which is provided by the investment managers and

reviewed by the management for reasonableness.

While the Foundation believes its valuation methods are appropriate and consistent with other market

participants, the use of different methodologies or assumptions to determine the fair value of certain

financial instruments could result in a different estimate of fair value at the reporting date.

The Foundation’s financial instruments at June 30, 2018 are summarized in the following table by their

fair value hierarchy:

Total Level 1 Level 2 Level 3

Investments measured at fair value:

Bond mutual funds (domestic) $ 22,256,803 22,256,803 — —

Common stock mutual funds

(domestic) 85,676,939 85,676,939 — —

Common stock mutual funds

(international) 42,892,144 42,892,144 — —

Venture capital investments 1,876,950 — — 1,876,950

Subtotal 152,702,836 $ 150,825,886 — 1,876,950

Investments measured at net asset

value:

Absolute return 32,393,018

Private equity 19,667,196

Realty investments 11,178,696

Subtotal 63,238,910

Total cash equivalents

and investments $ 215,941,746

ROWAN UNIVERSITY



June 30, 2018

57 (Continued)

Investments Measured at NAV

The following table represents the unfunded commitments and redemption terms by investment type as

of June 30, 2018:

Redemption

frequency

Unfunded (if currently Redemption

Fair value commitments eligible) notice period

Absolute return(a) $ 32,393,018 None Quarterly 65–100 days

Private equity(b) 19,667,196 16,389,000 Illiquid Not applicable

Realty investments(c) 11,178,696 11,398,000 Illiquid Not applicable

$ 63,238,910

(a) Absolute return includes 3 hedge funds that seek to achieve capital appreciations through various

strategies, including long/short equity, long/short credit, relative value and other market neutral

strategies. For one of the investments valued at $18.9 million as of June 30, 2018, redemptions are

restricted due to lockup provisions through March 31, 2019, whereas the remaining 75% of the

investment will be released from restriction equally at the end of each quarter end. The remaining

investments are redeemable as disclosed above.

(b) Private equity includes 13 funds that seek to invest in nonpublicly traded investments that will

eventually be sold at a return in excess of public markets. This strategy is implemented through

illiquid vehicles and cannot be redeemed. The remaining life of these funds is 1 to 11 years with

possible extensions for nine funds. Capital is distributed to investors as the funds’ investments are

liquidated over that time period.

(c) Realty investments include a total of 8 funds. One of the investments is an open end fund that has

quarterly liquidity with 90 days’ notice. 6 funds seek to purchase real estate that can be improved

and later sold to provide a return that is in excess of public real estate markets. This strategy is

implemented through illiquid vehicles and cannot be redeemed. The remaining life of these funds is

2 to 6 years with possible extensions for three funds. Capital is distributed to investors as the funds’

investments are liquidated over that time period.

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June 30, 2018

58 (Continued)

(c) Restricted Nonexpendable Net Position Restricted nonexpendable net position as of June 30, 2018 consists of the following:

Henry and Betty Rowan for general operations $ 97,000,118

Henry M. Rowan College of Engineering Endowment 15,000,000

Jean & Ric Edelman Fossil Park Endowment 3,497,442

Rohrer College of Business 3,096,955

Keith and Shirley Campbell Endowment to support library

operations 1,641,896

Thomas N. Bantivoglio Honors Program for scholarships 1,343,347

John B. Campbell Professorial Chair 1,176,282

Rohrer Scholars for scholarships 1,080,932

Lawrence & Rita Salva Medical School 1,010,250

William G. Rohrer Professorial Chair in the College of

Business 1,000,000

King Family Professorial Chair 1,000,000

CMSRU Student Loan Assistance Program 1,000,000

Inspira Health Network Endowed Fund 1,000,000

Endowed Chair for Geriatrics 1,000,000

Henry M. Rowan Endowment for Engineering Scholarship —

Other endowment funds 13,436,367

$ 143,283,589

(d) Adoption of Accounting Pronouncements In fiscal year 2018, the Foundation implemented GASB Statement No. 81, Irrevocable Split Interest Agreements (GASB 81). GASB 81 requires that a government that receives resources pursuant to an

irrevocable split interest agreement recognize assets, liabilities and deferred inflows of resources at the

inception of the agreement. GASB 81 also requires that a government recognize revenue when the

resources become applicable to the reporting period. The Foundation’s charitable gift annuity

ROWAN UNIVERSITY



June 30, 2018

59 (Continued)

agreements meet the definition of an irrevocable split interest agreement in which the Foundation has a

remainder interest under GASB 81.

The provisions of GASB 81 have been retroactively applied to the beginning net position of fiscal year

2018. The following is a reconciliation of the total net position as previously reported at July 1, 2017 to

the total restated net position:

Total net position as previously reported

as of July 1, 2017 $ 207,538,612

Restatement to beginning of year net

position (286,756)

Total net position as of

July 1, 2017, as restated $ 207,251,856

(13) South Jersey Technology Park at Rowan University, Inc.

Component Unit

South Jersey Technology Park at Rowan University, Inc. (SJTP) was established and is being maintained

as part of the economic outreach vision of the University, its initial sole member. SJTP hopes to create jobs

and job training and provide new and varied “hands-on” educational experiences for the University students

as well as combat community deterioration. The goal of SJTP is to create job opportunities and job training

for the under-employed and unemployed of the South Jersey region. SJTP is an organization described

under Section 501(c) (3) of the Internal Revenue Code and therefore exempt from Federal income taxes

under Section 501(a) of the Code. SJTP’s assets are used exclusively for the benefit, support, and

promotion of the University and its educational activities. Because the members of the SJTP Board of

Directors are appointed by the Board of Trustees of the University, SJTP is considered a component unit of

the University and is discretely presented as part of the University’s financial statements.

ROWAN UNIVERSITY



June 30, 2018

60

(a) Related Party Transactions Lease Agreements

In fiscal year 2008, the University Board of Trustees approved a long-term lease agreement for the

SJTP to use a parcel of land owned by the University. The lease commenced on January 1, 2008 and

is for 50 years with a renewal term of 20 years. Under the lease agreement, SJTP is to pay $1,000

each year. The rental payment of $1,000 is included in professional and other services expenses in the

accompanying statement of revenues, expenses, and changes in net position for fiscal year 2018.

The University Board of Trustees approved a lease agreement by and between the University and the

SJTP to lease the first floor of the Samuel H. Jones Innovation Center to support its educational

mission. Beginning July 16, 2016, the University also assumed the lease for the second floor of the

Innovation Center and intends to conduct renovations to increase wet lab space for the University. For

the year ended June 30, 2018, SJTP recognized $1,135,604 in rental income related to this lease

agreement. The University also reimbursed SJTP $148,234 for utility charges associated with this

lease for fiscal year 2018.

Business Operating Agreement

SJTP and the University entered into a business operating agreement for the University to provide

certain services and functions to SJTP. SJTP pays the University for these services and functions

which include salaries and benefits of employees who perform functions for SJTP, accounting services,

custodial services, repairs and maintenance, and other indirect charges. The charges amounted to

$397,674 for fiscal year 2018 and are reflected in professional and other services expenses in the

accompanying statements of revenues, expenses, and changes in net position.

(14) Subsequent Events

On February 6, 2019 Rowan University, as the fixed rate payer, entered into a swap agreement with the

Royal Bank of Canada, as the floating rate payer, in the notional amount of $72,595,000 with a termination

date of July 1, 2035 at a fixed interest rate of 2.28850% with a mandatory early termination date of January

1, 2021. In addition, on January 14, 2019, the University paid the outstanding loan balance of $2,504,137

to NEXUS Properties. This loan had been for the fit-out of the classroom portion of the A-3 building

situated at Victoria Street and Mick Drive in the Borough of Glassboro.


Required Supplementary Information (Unaudited)

Schedules of Employer Contributions

June 30, 2018

Public Employees’ Retirement System 2018 2017 2016 2015

Contractually required contribution $ 7,325,414 5,331,193 3,690,074 2,386,805 Contributions in relation to the contractually required contribution 7,325,414 5,331,193 3,690,074 2,386,805

Contribution deficiency (excess) $ — — — —

University employee covered-payroll $ 50,762,197 52,135,711 50,275,748 51,495,300

Contributions as a percentage of employee covered payroll 14.43 % 10.23 % 7.34 % 4.63 %

Police and Firemen’s Retirement System 2018 2017 2016 2015

Contractually required contribution $ 1,069,699 805,419 545,161 268,537 Contributions in relation to the contractually required contribution 1,069,699 805,419 545,161 268,537

Contribution deficiency (excess) $ — — — —

University employee covered-payroll $ 1,901,881 1,960,579 1,918,325 2,066,181

Contributions as a percentage of employee covered payroll 56.24 % 41.08 % 28.42 % 13.00 %

Information provided for Required Supplementary Information will be provided for ten (10) years, as the information becomesavailable in subsequent years.

See accompanying independent auditors’ report.

61



Schedules of Proportionate Share of the Net Pension Liability

June 30, 2018

Public Employees’ Retirement System 2018 2017 2016 2015

University proportion of the net pension liability – State Group 1.152 % 1.147 % 1.058 % 1.184 %University proportion of the net pension liability – Total Plan 0.604 0.571 0.544 0.613

University proportionate share of the net pension liability $ 295,481,815 337,030,671 251,080,946 238,238,870 University employee covered-payroll 52,135,711 50,275,748 51,495,300 50,121,737

University proportionate share of the net pension liability as a percentage of theemployee covered-payroll 566.8 % 670.4 % 487.6 % 475.3 %

Plan fiduciary net position as a percentage of the total pension liability 36.78 % 31.20 % 38.21 % 42.74 %

Police and Firemen’s Retirement System 2018 2017 2016 2015

University proportion of the net pension liability – State Group 0.412 % 0.395 % 0.379 % 0.406 %University proportion of the net pension liability – Total Plan 0.084 0.073 0.073 0.083

University proportionate share of the net pension liability $ 18,121,876 18,589,182 16,256,503 14,428,274 University employee covered-payroll 1,960,579 1,918,325 2,066,181 1,985,629

University proportionate share of the net pension liability as a percentage of theemployee covered-payroll 924.3 % 969.0 % 786.8 % 726.6 %


Teachers’ Pension and Annuity Fund 2018 2017 2016 2015

University proportion of the net pension liability 0.002 % 0.002 % 0.010 % 0.012 %

University proportionate share of the net pension liability $ — — — — State’s proportionate share of the net pension liability associated with the University 1,479,732 1,744,239 6,423,696 6,406,231

Total net pension liability $ 1,479,732 1,744,239 6,423,696 6,406,231

University employee covered-payroll — — 7,656 7,656

University proportionate share of the net pension liability as a percentage of theemployee covered-payroll — % — % — % — %


Information provided for Required Supplementary Information will be provided for ten (10) years, as the information becomes available insubsequent years.

Notes to Required Supplementary InformationChanges in benefit terms – There were no significant changes in benefits for any of the actuarial valuations used to determine required contributions.Changes in assumptions – There were no significant changes in assumptions except for the annual change in the discount rate and the change in the long-term rate ofreturn as follows:

PERSFor 2017, the discount rate changed to 5.00% and the long-term rate of return changed to 7.00%. For 2016, the discount rate changed to 3.98%, the long-term expected rate of return changed to 7.65% from 7.90%. For 2015, the discount rate changed to 4.90% from 5.39%.PFRSFor 2017, the discount rate changed to 6.14% and the long-term rate of returned changed to 7.00%. For 2016, the discount rate changed to 5.55%, the long-term expected rate of return changed to 7.65% from 7.90%. For 2015, the discount rate changed to 5.79% from 6.32%.


62

2018

University proportion of the collective total OPEB liability — %

University proportionate share of the collective total OPEB liability $ — State's proportionate share of the total OPEB liability associated with

the University 554,246,968

Total OPEB liability $ 554,246,968

University covered-employee payroll 172,658,885

University proportionate share of the total OPEB liability as a percentage of covered-employee payroll — %

Information provided for Required Supplementary Information will be provided for ten (10) years, as the information becomes available in subsequent years.

Notes to the Schedule: For the State Health Benefit State Retired Employees Plan, there are no assets accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Other Postemployment Benefits Other Than Pensions.




Schedule of Proportionate Share of the Total OPEB Liability

June 30, 2018

63

DRAFT 3/29/2019 7:00 PM 783801_18_RowanUniv_SA.xlsx


Schedule of Expenditures of Federal Awards


AmountFederal passedCFDA Pass through Current year through to

Federal grantor/pass-through grantor/program or cluster title number grant number expenditures subrecipients

Research and Development Cluster:U.S. Department of Defense:

Passed through U.S. Army Corps of Engineers:1-3 Evaluation of Geogrid Reinforced Airfield Pavements 12.116 W1913E517C0010 $ 245,310 —

Geospatial Factors and the Trafficking/Terrorism Nexus in Eurasia 12.300 — 70,252 — Passed Through Naval Surface Warfare Center, Philadelphia Division:

Polymer Nanocomposites with Enhanced Dielectric Strength and Reduced Thermal 12.300 N00174-17-1-008 67,333 — Contraction for Superconductor Cables

Passed through U.S. Army:Synthesis and Characterization of Bio-based Resins for the Development of

Sustainable Polymers and Composites for DOD Applications 12.431 W911NF-14-2-0086 558,193 — Passed through Drexel University:

Biobased Thermosetting Polymers for Composite, Adhesive and Coating Applications 12.431 W911NF-16-2-0225 183,332 — Passed through Northeastern University:

Engineered Materials and Materials Design of Engineered Materials 12.431 W911NF-15-2-0026 13,234 — A Virtual Reality Training Environment for Cold Spray Application: A

Feasibility Study 12.431 W911NF-10-2-0098, W911NF-15-2-0036 4,480 —

Total U.S. Department of Defense 1,142,134 —

Federal Aviation Administration:Visualization of Unmanned Aircraft Systems (UAS) within CAVE Virtual

Reality Environment: A Feasibility Project 20.108 — 34,500 —

Total Federal Aviation Administration 34,500 —

U.S. Department of Transportation:Second Strategic Highway Research Program (SHRP2) Education Connection 20.200 — 4,026 — Passed through State of New Jersey Department of Transportation:

HVS Evaluation of Flexible Overlays on Composite Pavement 20.200 16-60100 99ROW1 330,992 — Passed through Rhode Island Department of Transportation:

Development of Pavement Preservations Strategies Based on Pavement ME 20.215 3400045 10,240 — Passed through Research Foundation of CUNY on behalf of City College of New York:

University Transportation Research Center:Heavy Vehicle Simulator and Full-Scale Accelerated Pavement Testing Workshop at

Rowan University: A Collaborative Effort between Rowan University, VirginiaTransportation Research Council and Florida Department of Transportation 20.701 DTRT13-G-UTC32 4,804 —

Passed through Research Foundation of CUNY:Evaluation of Simulations Models for Road Weather Information System 20.701 DTRT13-G-UTC32 58,179 —

Total U.S. Department of Transportation 408,241 —

National Aeronautics and Space Administration:Passed through University of Arizona:

OSIRIS – Rex Asteroid Sample Mission 43.001 NNM10AA11C 138,751 — NGSS 2017 Rowan University College of Science & Mathematics Summer Research Program 43.001 NNX15AK05H 28,740 — NGSS 2017 Rowan University Physics Summer Research Program 43.001 NNX15AK05H 9,000 —

Passed through Rutgers University:MemSat at Rowan 43.008 NNX10AR62H 19,301 — NJSG Space Grant Consortium Training Grant 2015-2018 43.008 6245 42,775 — NJSG Consortium Training Grant 2015-2018 43.008 6248 9,911 —

Total National Aeronautics and Space Administration 248,478 —

National Science Foundation:AIS: Learning From Initially Labeled Nonstationary Streaming Data 47.041 — 65,908 — MRI: Acquisition of a High Performance Computer (HPC) to Integrate Data Intensive Research

and Education: Bringing HPC to South Jersey 47.041 — 99 — MRI: Acquisition of a Scanning Electron Microscope for Research and Education 47.041 — 451,500 — RUI: Continuous Processing for Improved Properties of Nanofibers 47.041 — 57,393 — IUSE/PFE:RED: Rethinking Engineering Diversity, Transforming Engineering

Diversity (REDTED) 47.041 — 514,452 31,000 REU: Probing mechanotransduction of disturbed flow in brain vasculature 47.041 — 44,931 — REU Site: Biomedical Materials, Devices, Therapeutics, and Emerging Frontiers 47.041 — 44,411 — NSF: Supporting Agency Among Early Career Engineering Education Faculty in

Diverse Institutional Contexts 47.041 — 14,344 — MRIMATH: Coordinates and Volumetrics for Brain Tumors 47.041 — 30,763 — CAREER: Nanostructured Particle Stabilized Bicontinuous Emulsions: Structure-Formation

Principles, Structure Function Relationships and Biphasic Transport Processes 47.041 7,716 — CAREER: Post-Processing Polymer Nanofibers for Improved Mechanical Properties 47.041 — 107,102 — Electrochemical, Spectroscopic, Thermodynamics, and Computational

Investigations of Hydrogen Ions Solvations in Acidic Ionic Liquids-Approachto High Proton Conductivity Ionic Liquid Electrolytes 47.049 — 58,259 —

CAREER: Metallooxaziridiness for the Synthesis of Nitrogen-Containing Three-MemberedHeterocycles 47.049 — 8,141 —

Passed through University of Delaware:SusChEM: Biobased Platform for the Sustainable Molecular Design and Controlled Synthesisof Block Polymers for Renewable Feedstocks 47.049 1507010 9,003 —

Passed through American Physical Society:PhysTEC Comprehensive Site at Rowan University 47.049 PT-013-2016 26,220 — PhysTec Year 3 47.049 PT-013-2017 77,585 —

MRI: Development of a Localized Field Emission Scanning Electron Microscope andSecondary Electron Spin Polarization Analysis System 47.049 — 110,106 —

NSF – Theoretical and Algorithmic Foundations of Constrained Particle Filtering 47.070 — 93,169 48,398 RUI/SG: Phylogenetic Relationships of Archaic "ungulates" and Their Implications for the Timing

and Rate of Divergence of Placental Mammal Clades 47.074 — 34,838 2,029 Ecological Indentity and Solid Waste Governance 47.075 — 34,654 — Scholarships to Enhance the High Tech Workforce of Southern New Jersey 47.076 — 68,277 — Rowan Noyce Scholars Program 47.076 — 68,168 — Enhancing the Undergraduate STEM Curriculum Through a

Multidisciplinary Approach that Integrates Biology and Engineering 47.076 — 50,561 — Collaborative Research: Training Next Generation Faculty and Students to

Address the Infrastructure Crisis 47.076 — 14,461 — Collaborative Research: Experiential Process Safety Training for Chemical Engineers 47.076 — 12,104 — Passed Through City College of New York:

CREATE, Cornerstone to Capstone: Integrating a Transformative Paradigm for BiologyEducation Through the Curriculum 47.076 DUE 1323006 19,448 —

64 (Continued)






Federal grantor/pass-through grantor/program or cluster title number grant number expenditures subrecipientsEngaging in STEM Education with Big Data Analytics and Technologies:

A Rowan-Cove Initiative 47.076 — 86,932 20,632

Algae Grows the Future 47.076 — $ 100,492 — Passed Through Columbia University:

Workshop on Antarctic Surface Hydrology and Future Ice-Shelf Stability 47.078 NNX16AO75G 2,729 — IRES: Philadelphia-Singapore Optics Research Experience for Undergraduates 47.079 — 51,975 —

Total National Science Foundation 2,265,741 102,059

U.S. Department of Veteran Affairs:Passed through Medical College of Wisconsin:

ANK-dependent ATP Efflux Causes Calcium Pyrophasphate Deposition inCartilage 64.UNK BX-13-001 24,157 —

Total U.S. Department of Veteran Affairs 24,157 —

U.S. Environmental Protection Agency:An Integrated Strategy to Improve Green Infrastructure Approaches in Philadelphia 66.509 — 19,829 — Sustainable P2 Design for Batch-based Speciality Chemical Manufacture 66.708 — 6,604 — Process Intensification in Food Manufacture – A Path to Water, Energy, Waste Reduction 66.708 — 17,612 — FY2015 Brownfields Area-Wide Planning Grant 66.814 — 49,966 20,818

Total Environmental Protection Agency 94,011 20,818

U.S. Department of Health and Human Services:Prevention of Opioid Misuse and Overdose in High Risk Women in New Jersey 93.088 — 80,718 12,900

Health Resources and Services Administration:Model State Supported Area Health Education Centers (AHEC) 93.107 — 62,656 50,417 Model State Support Area Hlth Edu Center 93.107 — 220,466 175,349 Health Careers Opportunity Program 93.822 — 632,715 — Educating future primary care providers for transforming health care systems 93.884 — 226,565 17,707 Primary Care Training and Enhancement 93.884 — 195,922 — Geriatric Workforce Program 93.969 — 1,085,533 334,187

Total Health Resources and Services Administration 2,423,857 577,660

National Institutes of Health:Planaria as a high-throughput screening tool for assessing neurodevelopmental toxicity of BPA

and BPA substitutes 93.113 — 116,571 — Heterogeneous Properties of LC Efferents to Modality-Specific Terminal Fields 93.242 — 429,640 62,833 Game-based Contingency Management for Smoking Cessation 93.279 — 16,340 6,000 Breathe Free: Smartphone Videogame-Based Incentives for Smoking Cessation 93.279 — 73,402 — Passed through Geisinger Clinic:

Clinical and Genetic Study of Prescription Opioid Addiction 93.279 626510RU01 16,205 — Do Cocaine and Chronic Stress Converge in the Basolateral Amygdala? 93.279 — 165,290 — Abuse Liability and Anti-Addiction Potential of the Atypical Mu Opioid Receptor Agonist IBNtxA 93.279 — 50,441 — Team-based Projects to Improve Student Design Experience 93.286 — 9,492 — Fatty Acids-mediated Inflammation 93.307 — 245,186 — Passed through Kent State University:

Mindfulness-Based Stress Reduction for High Blood Pressure: A Two-Site RCT 93.837 3R01HL119977-04S1 49,464 — Post Resusciatation PaCO2 and Neurological Outcomes After Cardiac Arrest 93.837 — 118,259 — Self-assembling Biomimetic Hydrogels with Bioadesive Properties for

Intervertebral Disc Repair 93.846 — 44,207 — Emerin regulation of molecular pathways: Implications for muscle disease 93.846 — 102,003 — Stem Cell Based Therapy 93.853 — 100,940 — Passed through University of Pennsylvania:

Temporal Lobe Epilepsy and Retrotransposons 93.853 R21NS095756 42,266 — Antimicrobial mechanisms of Specialized Proresolving Medicators 93.855 — 12,527 — Passed through Tufts University:

Signaling Mechanisms in VIBRIO Cholearae Parallel Quorum Sensing Pathways 93.855 R01AI121337 19,768 — Passed through Integral Molecular:

Development of P2X Reception Pain Therapeutic Monoclonal Antibodies 93.859 R44GM096500 22,652 — Signaling Pathways that Mediate the S Cerevisiae Response to Oxygen Levels 93.859 — 92,711 — Bridges to Baccalaureate: Cumberland County College Bridge to Rowan 93.859 — 44,905 — Mechanisms of Transcription 93.859 — 182,317 — Stress Dyamics 93.859 — 335,394 — Stress and Cyclin C 93.859 — 93,864 — Traditional Rescue Mechanisms in Eukaryotes 93.859 — 316,352 — Translational Control of Mitochondrial Gene Expression 93.859 — 167,928 — Dissecting the Origins of a Complex Reproductive Trait: Nemotode Self Fertility 93.859 — 189,710 — Regulation fo the Gli Protein TRA-1 by Co-factors 93.859 — 230,336 — Replication-Transcription Switch in Mitochondria 93.859 — 114,006 — Effects of Hurricane Sandy on Functional Limitation Trajectories of Older Adults 93.866 — 512,932 — MIR, Genetic and Cognitive Precursors of AD and Dimentia 93.866 — 1,851 — Blood-based Biomarkers for Early Detection of Alzheimers Disease 93.866 — 560,049 — NIH Silicone Hydrogel Contact Lenses with Controlled & Extended Release of Latanopr 93.867 — 45,108 —

Total National Institutes of Health 4,522,116 68,833

National Institute on Drug Abuse:Passed through University of Pennsylvania:

Predicting AOD Relapse and Treatment Completion from Social Media Use 93.279 565914 1,039 —

Total National Institute on Drug Abuse 1,039 —

Total U.S. Department of Health and Human Services 7,027,730 659,393

U.S. Department of Justice:Office for Victims of Crimes

Passed through Research and Statistics Association:Understanding the Needs and Experiences of Families and Friends of Homicide Victims 16.582 2016-XV-GX-K006 2,662 —

Total Office of Victims of Crimes 2,662 —

Total U.S. Department of Justice 2,662 —

U.S. Department of Commerce:National Institute of Standards and Technology:

FY 2018 Summer Undergraduate Research Fellowship MatSci/NCNR 11.620 — 5,863 —

Total National Institute of Standards and Technology 5,863 —

Total U.S. Department of Commerce 5,863 —

65 (Continued)






Federal grantor/pass-through grantor/program or cluster title number grant number expenditures subrecipientsU.S. Department of Agriculture:

Rural Utilities Service:Proactive Waste Management Through Infrared Thermography for Landfill Monitoring

and Fire Warning: Demonstration and Training 10.761 — 88,777 —

Development of Multi-Scale Non-Invasive In Situ and Remote Sensing Techniques forProactive Waste Management: Demonstration and Training 10.762 — $ 17,846 —

Total U.S. Department of Agriculture 106,623 —

U.S. Department of Housing and Urban Planning:Passed through the NJ Department of Community Affairs:

Impact-Based Decision Making Framework for Community-based ResiliencyPlanning under Extreme Storm Events 14.269 B-13-DS-34-0001; SRPAG-184782 440,693 —

Total U.S. Department of Housing and Urban Planning 440,693 —

Total Research and Development Cluster 11,800,833 782,270

Student Financial Assistance Cluster:U.S. Department of Education:

Federal Supplemental Educational Opportunity Grant 84.007 — 495,496 — Federal Work Study 84.033 — 873,071 — Federal Perkins Loan 84.038 — 4,158,504 — Federal Pell Grant Program 84.063 — 23,174,865 — Federal Direct Student Loans 84.268 — 145,420,006 — Teacher Education Assistance for College and Higher

Education Grants (TEACH Grants) 84.379 — 40,072 —

Total U.S. Department of Education 174,162,014 —

U.S. Department of Health and Human Services:Loans for Disadvantaged Students 93.342 — 618,148 —

Total Student Financial Assistance Cluster 174,780,162 —

U.S. Department of Education:Language, Literacy, and Cultural Practices in Oaxaca, Mexico: A Rowan Summer

Experience for K-12 Educators 84.021 — 40,242 —

Upward Bound:Rowan University Upward Bound Program 84.047 — 11,300 — Upward Bound Program for ELL 84.047 — 243,998 —

Total Upward Bound Program for ELL 255,298 —

Passed through Center for Family Services:Pre-Award Spending Acct – S. Zion 84.215 U215N160015 30,603 —

Office of Post Secondary Education:Passed through New Jersey Higher Education, Office of the Secretary of Higher Education:

C.H.A.M.P. / GEAR-UP Program at Rowan University 84.334 17YR6-809170-0004 422,338 — FY 18 GEAR UP Camden 84.334 18YR7-NCE-809170-0004 22,594 — CHAMP – College Bound FY18 84.334 18YR7-NCE-809170-0004 317,644 —

Total Office of Post Secondary Education 762,576 —

Total U.S. Department of Education 1,088,719 —

U.S. Department of Health and Human Services:Passed through Allegheny-Singer Research Institute:

AGH Center for Traumatic Stress in Children and Adolescents (CORE) 93.243 U79SM061257 7,092 — AGH Center for Traumatic Stress in Children and Adolescents (CORE) 93.243 5U79SM080056-02 3,200 —

Total U.S. Department of Health and Human Services 10,292 —

U.S. Department of Justice:Passed through the NJ Department of Law and Public Safety:

Anti-Gang Statewide Assessment 16.710 2015-GV-VW-0002 14,348 —

Total U.S. Department of Justice 14,348 —

U.S. Department of Transportation:Passed through Research Foundation of CUNY:

Graduate Scholarships – Advanced Institute for Transportation Education (AITE) 20.701 49198-02-28 7,875 —

Total U.S. Department of Transportation 7,875 —

National Endowment for the Humanities:Preservation Assistance Grant For Campbell Library University Archives

and Special Collections 45.149 — 5,950 — Cultivating the Environmental Humanities 45.162 — 34,314 —

Total National Endowment for the Humanities 40,264 —

Total expenditures of Federal awards $ 187,742,493 782,270

See accompanying notes to schedules of expenditures of Federal and State of New Jersey awards.

66



Schedule of Expenditures of State of New Jersey Awards


State of New Jersey AmountState of New Jersey pass-through Grant Current year passed-through

grantor/pass-through grantor/program or cluster title number amount Grant period expenditures to subrecipients

Research and Development Cluster:New Jersey Department of Transportation:

Passed through Research Foundation of CUNY:Alternatives to Nuclear Density Testing 99ROW1-17-60138 – Task Order 23 $ 34,892 08/28/17 – 12/29/17 $ 17,283 — Task 3B Mobile Data Collection and Utilization 996475; Task Order 115 124,994 05/15/17 – 12/31/17 103,714 —

New Jersey Commission on Cancer Research:Cyclin C Mediated Apoptosis (2016 Pre and Post Doctoral Cancer

Research Grant) DFHS16PPC067 100,000 01/01/16 – 03/31/18 34,873 — New Jersey Commission on Brain Injury:

Impact of Repetitive Mild Traumatic Brain Injury (TBI) on Attentionand Catecholamine Efflux in Prefrontal Cortex CBIR17PIL007 172,874 07/01/17 – 06/30/19 78,462 —

New Jersey Department of Health:New Jersey Governor’s Council for Medical Research and Treatment of Autism:

Using SMART Treatment Design to Evaluate Applied BehaviorAnalysis Interventions on Communication in Preschool Childrenwith Autism CAUT15APL021 398,050 06/29/15 – 06/30/18 116,477 —

Metabolic Perturbations with Autism Induced by Plasticizers CAUT15APA022 399,972 07/01/15 – 06/30/18 124,891 67,202 New Jersey Department of Environmental Protection:

Planning for Water Quality Phase 2: developing the NJ Buildout Modeler WR17-016 150,616 07/01/17 – 06/30/18 124,280 —

Total Research and Development Cluster 599,980 67,202

New Jersey Department of Military & Veterans Affairs:Rowan GIS Intern Program

Rowan GIS Intern Program Year 2 — 151,000 10/01/16 – 09/30/17 66,462 — Year 3 of 5: Rowan GIS Intern Program — 164,901 10/01/17 – 09/30/18 118,101 —

Total Rowan University G.I.S. Intern 184,563 —

Year 1 of 5: DMAVA-Crumrine: Enviornmental Intership Program — 138,643 10/01/16 – 09/30/17 33,352 — NJDMAVA Energy Audit Center — 336,336 07/01/12 – 06/30/22 53,835 —

NJDMAVA Energy Internship:Year 4 of 13: Everett Energy BIM Internship — 149,809 10/01/16 – 09/30/17 34,569 — Energy/building Information Model (BIM)/Builder Internship Program — 287,373 10/01/17 – 09/30/18 137,716 —

Total NJDMAVA Energy Internship 172,285 —

Facilities Managment Internship Program Year 1 of 10 — 216,341 10/01/16 – 09/30/17 113,998 — Facilities Management Internship Plan — 204,952 10/01/17 – 09/30/18 31,347 — Solar Hot Water — 82,631 01/01/16 – 12/31/18 22,150 —

Total New Jersey Department of Military & Veterans Affairs 611,530 —

New Jersey Higher Education, Office of the Secretary:CHAMP/GU Program Activity Grant 2017 17YR6-809170-0004 2,990 07/01/17 – 08/31/17 2,990 —

Total CHAMP/GEAR-UP 2,990 —

Educational Opportunity Fund – Article IV:FY17 EOF Academic Year Main Campus — 290,487 06/01/16 – 07/31/17 8,571 — FY18 EOF Summer Camden Campus — 141,033 07/01/17 – 08/31/17 112,929 — FY18 EOF Summer Main Campus — 420,083 07/01/17 – 08/31/17 396,621 — FY18 EOF Academic Year Camden Campus — 202,295 06/01/17 – 07/31/18 188,933 — FY18 EOF Academic Year Main Campus — 297,749 06/01/17 – 07/31/18 248,416 — FY19 EOF Academic Year Camden Campus — 202,295 06/01/18 – 07/31/19 1,479 — FY19 EOF Summer Main — 420,083 06/01/18 – 08/31/18 49,645 — Summer Pre-Matriculation Program — 1,000 06/05/17 – 07/31/18 775 — Summer Prep 2017 — 79,394 06/01/17 – 07/31/18 34,147 — Summer Prep 2018 — 78,394 05/18/18 – 07/31/19 11,396 —

Total Education Opportunity Fund – Article IV 1,052,912 —

Total New Jersey Higher Education, Office of the Secretary 1,055,902 —

New Jersey Department of Education:Building Teacher Leadership Continuation 17E00057 200,000 08/01/16 – 07/31/17 12,007 — Building Teacher Leadership Continuation 18E00088 134,609 10/01/17 – 05/31/18 123,565 — Math Science Partnerships 18E00013 184,402 07/01/17 – 06/30/18 170,423 —

Total New Jersey Department of Education 305,995 —

Student Financial Assistance Cluster:New Jersey Department of State: Higher Education Student Assistance Authority:

Educational Opportunity Fund 2401-100-074-001 801,650 07/01/17 – 06/30/18 799,000 — GEAR-UP 0001055904 48,105 07/01/17 – 06/30/18 48,105 — Governor’s Urban Scholarship Program 2405-100-074-2405-329 24,000 07/01/17 – 06/30/18 24,000 — Tuition Aid Grant Program 2405-100-074-2405-007 26,937,556 07/01/17 – 06/30/18 21,475,885 — New Jersey Student Tuition Assistance Reward Scholarship Program 2405-100-074-2405-313 406,484 07/01/17 – 06/30/18 382,734 —

Total Student Financial Assistance Cluster 22,729,724 —

New Jersey Department of Health:Institutional Review Board of Human Subjects Research — 108,000 07/01/15 – 06/30/20 56,654 — Huntington Disease FY 18 DFHS18HDS002 308,450 07/01/17 – 06/30/18 244,320 147,965 Opioid Education for Healthcare Professionals — 220,000 02/01/18 – 01/30/20 1,485 — Early Intervention Program 04-2123-EIP-N-0 1,747,742 07/01/16 – 06/30/18 538,196 — NJ Acute Stroke Registry Enhancement Project — 500,000 11/01/17 – 06/30/19 82,044 — Statewide Trauma Registry — 1,395,188 04/01/16 – 06/30/18 523,900 —

Total New Jersey Department of Health 1,446,599 147,965

New Jersey Department of Transportation:Phase I: Evaluation of Precast Concrete Pavement Systems and Cast In-place — 54,896 02/15/18 – 08/14/18 17,348 — 2017 National Summer Transportation Institute — 50,680 06/01/17 – 11/01/17 38,966 —

Total New Jersey Department of Transportation 56,314 —

New Jersey Department of Labor and Workforce Development:Talent Network: Construction Management — 275,000 01/01/18 – 12/31/18 85,326 —

Total New Jersey Department of Transportation 85,326 —

67 (Continued)



Schedule of Expenditures of State of New Jersey Awards


State of New Jersey AmountState of New Jersey pass-through Grant Current year passed-through

grantor/pass-through grantor/program or cluster title number amount Grant period expenditures to subrecipients

New Jersey State Council on the Arts:Rowan Art Gallery General Support 1805X020109 $ 6,000 07/01/17 – 06/30/18 $ 6,000 — 09 CSPA Co Sponsored Project 1805X090010 14,000 07/01/17 – 06/30/18 14,000 —

Total New Jersey State Council on the Arts 20,000 —

Higher Education Administration:Grants-In-Aid Appropriations to Senior Public Colleges and Universities — 71,448,506 07/01/17 – 06/30/18 71,448,506 — Fringe Benefits Other Than FICA For Senior Public Colleges and Universities — 68,215,821 07/01/17 – 06/30/18 68,215,821 — FICA (Social Security Tax) For Senior Public Colleges and Universities — 13,436,457 07/01/17 – 06/30/18 13,436,457 —

Total Higher Education Administration 153,100,784 —

New Jersey Department of Children and Families:Psychiatric Svcs Abused & Neglected 18BYDS 197,890 07/01/17 – 06/30/18 196,482 — Child Abuse and Foster Care Services 18XDDS 4,329,665 07/01/17 – 06/30/18 4,029,221 — Maternal, Infant and Early Childhood Home Visiting Program — 218,900 10/01/17 – 11/30/18 13,075 — CAP Fellowship FY18 — 174,963 07/01/17 – 06/30/18 171,591 — Regional Diagnostic Treatment Center Services Comburland County 16XDDS RDTC 763,645 07/01/15 – 06/30/16 793 — Children’s Mental Health 18LSMR 200,000 07/01/17 – 06/30/18 200,000 —

Total New Jersey Department of Children and Families 4,611,162 —

New Jersey Department of Human Services:Division of Family Development:

Early Childhood Leadership Institute-Grow NJ Kids — 330,570 01/01/16 – 07/31/18 187,968 — Early Childhood Leadership Institute — 175,120 01/01/18 – 12/31/18 3,922 —

Total Division of Famiy Development 191,890 —

Total New Jersey Department of Human Services 191,890 —

New Jersey Educational Facilities Authority:Higher Education Capital Improvement Grant:

Camden Bank Renovations – Phase II 046-09 17,622,760 03/01/14 – 6/30/18 384,809 — Academic Space Increase/Improvement 146-01 6,010,400 03/01/14 – 6/30/18 352,648 — Joint Health Sciences Center 146-03 9,989,600 03/01/14 – 6/30/18 2,475,395 —

Total Higher Education Capital Improvement Grant 3,212,852 —

Equipment Leasing Fund:Data Storage 046-11 750,000 03/01/14 – 6/30/18 24 —

Higher Education Technology Infrastructure Fund:Banner Upgrade 046-16 468,575 03/01/14 – 6/30/18 185,240 — Dark Fiber Network Upgrade 046-17 464,186 03/01/14 – 6/30/18 1,860 — Swipe Card System 046-19 1,280,000 03/01/14 – 6/30/18 468,803 —

Total Higher Education Technology Infrastructure Fund 655,903 —

Total New Jersey Educational Facilities Authority 3,868,779 —

Secretary of Higher Education:Building our Future Bond Act:

Rohrer College of Business Building 046-03 40,393,881 03/01/14 – 6/30/18 825,578 —

Total Building our Future Bond Act 825,578 —

Total Secretary of Higher Education 825,578 —

Total expenditures of State of New Jersey awards $ 189,509,563 215,167

See accompanying notes to schedules of expenditures of Federal and State of New Jersey awards.

68

ROWAN UNIVERSITY


Notes to Schedules of Expenditures of Federal and

State of New Jersey Awards


69

(1) Basis of Presentation

The accompanying schedules of expenditures of Federal and State of New Jersey awards include the

Federal and State of New Jersey grant activity of Rowan University (the University) and are presented on

the accrual basis of accounting. The information in these schedules is presented in accordance with the

requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements,

Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and New Jersey Office of

Management and Budget Circular 15-08, Single Audit Policy for Recipients of Federal Grants, State Grants

and State Aid. Therefore, some amounts presented in these schedules may differ from amounts presented

in, or used in the preparation of, the 2018 basic financial statements. The University has included

expenditures on prior year grant awards where extensions have been granted from funding agencies or

amounts were approved for outstanding purchase orders. Credit expenditures or expenditures occurring

after the grant period end typically result from grant or contract closing adjustments and transfers to

recognize awards for which the University overspent their authorized award amount and will cover the

excess with institutional funds.

(2) Indirect Cost Rate

The University has elected not to use the 10-percent de minimis indirect cost rate allowed under the

Uniform Guidance.

(3) Federal Perkins Loan Program and Loans for Disadvantaged Students

The University administers and accounts for certain aspects of the Federal Perkins Loan program (CFDA

84.038) and Loans for Disadvantaged Students (CFDA 93.342). The University’s basic financial statements

include the program’s net position and transactions. The balance of loans outstanding under these

programs as of June 30, 2018 were as follows:

Federal Loans for

perkins loan disadvantaged

program students

Beginning balance $ 4,158,504 538,148

New loans issued — 80,000

Payments (1,050,961) (53,417)

Write offs (1) —

Cancellations (1,656) —

Ending balance $ 3,105,886 564,731

(4) Federal Direct Loan Program

The University is responsible only for the performance of certain administrative duties with respect to the

Federal Direct Loan Program and, accordingly, these loans are not included in the University’s basic

financial statements. It is not practical to determine the balance of Federal Direct Loans outstanding to

students of the University as of June 30, 2018.

70

Independent Auditors’ Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial Statements Performed

in Accordance with Government Auditing Standards


Rowan University:

We have audited, in accordance with the auditing standards generally accepted in the United States of America

and the standards applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States, the financial statements of the business-type activities and the

aggregate discretely presented component units of Rowan University (the University), a component unit of the

State of New Jersey, as of and for the year ended June 30, 2018, and the related notes to the financial

statements, which collectively comprise the University’s basic financial statements, and have issued our report

thereon dated March 29, 2019, which contained an unmodified opinion on those financial statements. Our

report contained an emphasis of matter paragraph regarding the University’s adoption of Governmental

Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for

Postemployment Benefits Other Than Pensions and the Rowan University Foundation’s adoption of

GASB Statement No. 81, Irrevocable Split-Interest Agreements. The financial statements of Rowan University

Foundation and South Jersey Technology Park at Rowan University, Inc. were not audited in accordance with

Government Auditing Standards, and accordingly, this report does not include reporting on internal control over

financial report or instances of reportable noncompliance associated with Rowan University Foundation and

South Jersey Technology Park at Rowan University, Inc.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the University’s internal control

over financial reporting (internal control) to determine the audit procedures that are appropriate in the

circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of

expressing an opinion on the effectiveness of the University’s internal control. Accordingly, we do not express

an opinion on the effectiveness of the University’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,

misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal

control, such that there is a reasonable possibility that a material misstatement of the entity’s financial

statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a

deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet

important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section

and was not designed to identify all deficiencies in internal control that might be material weaknesses or

significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal

control that we consider to be material weaknesses. However, material weaknesses may exist that have not

been identified.



71

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the University’s financial statements are free from

material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,

contracts, and grant agreements, noncompliance with which could have a direct and material effect on the

determination of financial statement amounts. However, providing an opinion on compliance with those

provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of

our tests disclosed no instances of noncompliance or other matters that are required to be reported under

Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and

the results of that testing, and not to provide an opinion on the effectiveness of the University’s internal control

or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing

Standards in considering the University’s internal control and compliance. Accordingly, this communication is

not suitable for any other purpose.


March 29, 2019

72

Independent Auditors’ Report on Compliance for Each Major Federal and State of New Jersey

Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of

Federal Awards Required by the Uniform Guidance and Schedule of Expenditures of State

of New Jersey Awards Required by New Jersey OMB Circular 15-08


Rowan University:

Report on Compliance for Each Major Federal and State of New Jersey Program

We have audited Rowan University’s (the University) compliance with the types of compliance requirements

described in the Federal OMB Compliance Supplement and the New Jersey Office of Management and Budget

(New Jersey OMB) State Grant Compliance Supplement (the Compliance Supplements) that could have a

direct and material effect on each of the University’s major Federal and State of New Jersey programs for the

year ended June 30, 2018. The University’s major Federal and State of New Jersey programs are identified in

the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with Federal and State of New Jersey statutes, regulations, and the

terms and conditions of its Federal and State of New Jersey awards applicable to its Federal and State of New

Jersey programs.

Auditors’ Responsibility

Our responsibility is to express an opinion on compliance for each of the University’s major Federal and State

of New Jersey programs based on our audit of the types of compliance requirements referred to above. We

conducted our audit of compliance in accordance with auditing standards generally accepted in the United

States of America; the standards applicable to financial audits contained in Government Auditing Standards,

issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal

Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for

Federal Awards (Uniform Guidance) and New Jersey OMB Circular 15-08, Single Audit Policy for Recipients of

Federal Grants, State Grants and State Aid (New Jersey OMB Circular 15-08). Those standards, the Uniform

Guidance and New Jersey OMB Circular 15-08 require that we plan and perform the audit to obtain reasonable

assurance about whether noncompliance with the types of compliance requirements referred to above that

could have a direct and material effect on a major Federal or State of New Jersey program occurred. An audit

includes examining, on a test basis, evidence about the University’s compliance with those requirements and

performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal

and State of New Jersey program. However, our audit does not provide a legal determination of the University’s

compliance.

Opinion on Each Major Federal and State of New Jersey Program

In our opinion, the University complied, in all material respects, with the types of compliance requirements

referred to above that could have a direct and material effect on each of its major Federal and State of New

Jersey programs for the year ended June 30, 2018.



73

Report on Internal Control Over Compliance

Management of the University is responsible for establishing and maintaining effective internal control over

compliance with the types of compliance requirements referred to above. In planning and performing our audit

of compliance, we considered the University’s internal control over compliance with the types of requirements

that could have a direct and material effect on each major Federal and State of New Jersey program to

determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an

opinion on compliance for each major Federal and State of New Jersey program and to test and report on

internal control over compliance in accordance with the Uniform Guidance and New Jersey OMB Circular

15-08, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.

Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over

compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over

compliance does not allow management or employees, in the normal course of performing their assigned

functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal

or State of New Jersey program on a timely basis. A material weakness in internal control over compliance is a

deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable

possibility that material noncompliance with a type of compliance requirement of a Federal or State of New

Jersey program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in

internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over

compliance with a type of compliance requirement of a Federal or State of New Jersey program that is less

severe than a material weakness in internal control over compliance, yet important enough to merit attention by

those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first

paragraph of this section and was not designed to identify all deficiencies in internal control over compliance

that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant

deficiencies may exist that have not been identified. We did not identify any deficiencies in internal control over

compliance that we consider to be material weaknesses. However, material weaknesses may exist that have

not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of

internal control over compliance and the results of that testing based on the requirements of the Uniform

Guidance and New Jersey OMB Circular 15-08. Accordingly, this report is not suitable for any other purpose.

74

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance and

Schedule of Expenditures of State of New Jersey Awards Required New Jersey OMB Circular 15-08

We have audited the financial statements of the business-type activities and the aggregate discretely presented

component units of the University as of and for the year ended June 30, 2018, and the related notes to the

financial statements, which collectively comprise the University’s basic financial statements. We issued our

report thereon dated March 29, 2019, which contained unmodified opinions on those financial statements. Our

audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise

the basic financial statements. The accompanying schedule of expenditures of Federal awards and schedule of

expenditures of State of New Jersey awards are presented for purposes of additional analysis as required by

the Uniform Guidance and New Jersey OMB Circular 15-08, respectively, and are not a required part of the

basic financial statements. Such information is the responsibility of management and was derived from and

relates directly to the underlying accounting and other records used to prepare the basic financial statements.

The information has been subjected to the auditing procedures applied in the audit of the basic financial

statements and certain additional procedures, including comparing and reconciling such information directly to

the underlying accounting and other records used to prepare the basic financial statements or to the basic

financial statements themselves, and other additional procedures in accordance with auditing standards

generally accepted in the United States of America. In our opinion, the schedule of expenditures of Federal

awards and the schedule of expenditures of State of New Jersey awards are fairly stated in all material

respects in relation to the basic financial statements as a whole.


March 29, 2019

ROWAN UNIVERSITY


Schedule of Findings and Questioned Costs


75 (Continued)

(1) Summary of Auditors’ Results

(a) Type of report issued on whether the basic financial statements were prepared in accordance with

U.S. generally accepted accounting principles: Unmodified

(b) Internal control deficiencies over financial reporting disclosed by the audit of the basic financial

statements:

● Material weaknesses: No

● Significant deficiencies: None reported

(c) Noncompliance material to the basic financial statements: No

(d) Internal control deficiencies over major Federal and State of New Jersey programs disclosed by the

audit:

● Material weaknesses: No

● Significant deficiencies: None reported

(e) Type of report issued on compliance for major Federal and State of New Jersey programs:

Unmodified

(f) Audit findings that are required to be reported in accordance with 2 CFR 200.516(a) or New Jersey

OMB Circular 15-08: No

(g) Major programs:

Federal:

● Student Financial Assistance Cluster (various CFDA numbers)

State of New Jersey:

● Student Financial Assistance Cluster (various grant numbers)

● Grants-In-Aid Appropriations to Senior Public Colleges and Universities

● Higher Education Capital Improvement Grant (various grant numbers)

(h) Dollar threshold used to distinguish between Type A and Type B programs for Federal awards:

$750,000; Dollar threshold used to distinguish between Type A and Type B programs for State of New

Jersey awards: $3,000,000

(i) Auditee qualified as a low-risk auditee for both Federal and State of New Jersey awards: No

ROWAN UNIVERSITY


Schedule of Findings and Questioned Costs


76

(2) Findings Relating to the Financial Statements Reported in Accordance with Government Auditing

Standards

None

(3) Findings and Questioned Costs Relating to Federal or State of New Jersey Awards

None